Buoyant growth and a ‘tick-shaped’ curve for recovery is the British Constructional Steelwork Association’s (BCSA) optimistic outlook for 2021: “We are forecasting a 12.1% increase in 2021 and a further 7.1% increase in 2022,” predicts chief executive officer Dr David Moore.
This is even more optimistic than last year’s forecast, when the BCSA was looking forward to a ‘slight boost’ in demand through 2020. Thanks to the Covid-19 pandemic and Brexit (see below) that did not pan out, even though construction escaped lockdown in most of the UK (Scotland allowed work to continue only on ‘essential sites’ until 28th May when other construction sites were allowed to return to work).
Moore’s forecast for 2021 therefore comes with some substantial caveats about the assumptions that have to be made, such as how long the lockdown will last, whether it will be a long and gradual process or whether there will be a second peak in infections and deaths later in the year. The changes to working practices – such as working from home – will also affect demand and ‘just in time’ deliveries from overseas suppliers will also suffer.
For example, in the commercial office sector, the BCSA predicts a 5.4% fall in 2021 and a further fall
of 6.2% in 2022 as more people find themselves working from home. That fall in demand is not just for steel, says Moore, but also includes other construction materials such as concrete.
But the BCSA is confident that other sectors will more than make up for this. Warehousing and manufacturing will, for instance, require greater capacity so there will be strong demand in the industrial shed market. “In 2021 we are forecasting a 12.0% rise and a further 12.3% rise in 2022 due to an increase in industrial shed capacity as more manufacturing and storage is moved back to the UK,” Moore says.
Demand could even exceed these forecasts, he believes, if plans for special port facilities go ahead as these will also need massive storage facilities. “It’s all excellent news for the steel industry because we dominate this market massively – we have 96-97% market share.”
The real boost, though, will come from public sector spending. Health, education, infrastructure – even prisons – feature in the government’s spending plans published in June as The National Infrastructure and Construction Procurement Pipeline 2020/21.
Worth between £29bn and £37bn, the procurement pipeline covers 340 individual procurements across 173 projects, with construction work accounting for roughly £19.2bn of the total.
Published by the Infrastructure and Projects Authority (IPA), the report is the first ever to outline spending and procurement for a year at a time (its reports usually cover multi-year pipeline plans). The report was published to provide better pipeline clarity to the industry during the crisis and is seen as a victory for organisations such as the BCSA.
“We’ve been lobbying government to bring the construction pipeline forward because we’re concerned that private sector clients have been delaying spending decisions,” says Moore. We wanted to see increased spending in Q3 and Q4, with some more carrying on into Q1 of 2021, and I’m pleased to say that seems to be what they’re doing.”
Infrastructure works are an important market for BSCA members, and the pipeline document does not disappoint: the design and build contract for the HS2 station in central Birmingham alone is worth £500m and road-building plans include a £7bn budget for smart motorways. Both of these projects generate a lot of work for steel fabricators.
Analysing these plans, the BCSA forecasts a 7.8% rise in 2021 and a further 9.3% rise in 2022 as the government invests in new and upgraded hospitals, schools and prisons. This includes 28 new-build schemes under the Free School programme, four new-build schemes under the Priority School Building Programme and two new prisons at Glen Parva and Wellingborough.
“This is a boost in public sector spending so you can see that once we get through Covid and lockdown the industry’s prospects are excellent,” says Moore.
David Moore bio
Dr David Moore is relatively new to his post as chief executive of the BCSA (he replaced Sarah McCann-Bartlett in December 2019) yet well-qualified to steer the association through the technical challenges that are expected in the immediate future.
Over the next three years more than 30 design guides to steel construction need to be updated or amended as the European codes and standards are comprehensively revised.
The biggest challenge, though, is Brexit. In the near future Moore and the BCSA will have to negotiate with former EU partners – plus any new markets – over the technical details that will have to underpin any trade deals.
A career technocrat, having spent 23 years with the Building Research Establishment before joining the BCSA 15 years ago, Moore is uniquely qualified for this task.
As the BCSA’s former director of engineering, Moore can now supervise the task of bringing design guides such as the ‘Blue Book’ – Steel Building Design: Data Design – with all the experience that comes from being a member of all the relevant technical committees.
The author of more than 70 peer-reviewed publications and design guides, Moore has contributed to the creation of many of the national and European standards for steel design and construction.
Consequently, he shouldn’t have much difficulty taking on the CEO’s external roles, particularly that of chairman of the British Standards Institution (BSI) committee responsible for the UK’s input into the development of the steel Eurocodes.
While there are many large projects ready to be commissioned, the economic landscape in which they will be constructed is far from clear, the UK having completed its divorce from the European Union by the time they take place.
“The transition period ends in December and we hope it ends with some kind of trade deal but we don’t know,” says BCSA CEO David Moore. Some consequences, such as the points-based immigration system, will have little effect upon the steelwork industry he believes.
Tariffs, though, may be simpler after January 2021. Since the introduction of UK Global Tariffs in May 2019, tariffs on steel remain at 0% and there are some welcome reductions. Tariffs on structural bolts, for instance, have been cut from 3.7% to 0%, and so-called ‘nuisance tariffs’ – those of less than 2% – have been removed. Tariffs are now organised into bands, so other tariffs have been rounded down to the nearest tariff band. For instance, a tariff of 14.3% might be rounded down to 12%.
Conformity assessments – standards – are a well-documented area of disagreement. The UK government is to introduce an equivalent to the CE marking, the UK Conformity Assessment (UKCA) marking. “Depending on the terms of the deal, it might be that anyone that is CE-marking will then have to get to grips with UKCA marking,” says Moore. “The position for CE markings is that they will be allowed for a limited time after January so that European competitors that are CE-marking can put their goods on the UK market.”
Northern Ireland is another matter. “My understanding is that the UK is trying to create a UK internal market where there is mutual recognition of marks between the four countries: England, Scotland, Wales and Northern Ireland. So, if we have a UKCA-marked product in England, we can put those on the markets of the other three countries and vice-versa”. Until the deal has been negotiated there is no certainty over what will be acceptable, says Moore.
Learning the lessons of Grenfell
A technical document such as the National Structural Steelwork Specification (NSSS) rarely reflects national events but under Dr David Moore’s guidance the 7th Edition is the BCSA’s bid to prevent tragedies such as the Grenfell Tower fire occurring.
“There were issues surrounding the quality of the components of the building, whether they met specification of the designer, whether they were fabricated and erected to the right specification,” explains Moore. “We felt that we at the BCSA should take ownership of the issues that we could control in terms of building design.”
The main item that the BCSA identified is intumescent paint, which Moore says is all too often regarded as decoration.
“This is not just paintwork, this is fire protection and is actually life-saving, so it has to be done correctly,” he declares.
The latest edition now contains a whole chapter on specifying and applying intumescent coatings correctly, going into details of the correct thickness to achieve the correct fire protection rating. This, he says, is part of the specification universally used throughout the UK and so will be part of the contract between the fabricator and the main contractor.
“We also want to change the way in which intumescent paints are applied, as this is generally done outside and we have seen a number of instances where these paints are actually beginning to flake off the steel structure,” he says. “We now state that these coatings should be applied in the workshop, an environment that can be controlled so the coatings adhere and perform correctly.”
The provisions also create a new role, Responsible Painting Co-ordinator, that ensures that these specifications are enforced.
The latest edition, which will be mandatory by the end of 2020, also tasks fabricators with having third party certified welding systems.
The BCSA has been fighting a rear-guard action against the Treasury introducing reverse VAT, which it says will badly damage its members’ businesses.
This system would mean that the customer receiving the service has to pay the VAT directly to HM Revenue & Customs instead of paying the supplier. For businesses, reverse VAT cuts cashflow while increasing administration costs.
So far, the BCSA has been successful in lobbying for postponements. Last year the introduction of reverse VAT was postponed from October 2019 until March 2020, when the pandemic provided a good reason to postpone it yet again until March 2021.
“We’re still lobbying quite hard to have it postponed indefinitely,” says BCSA chief executive David Moore, “that is to say – cancelled. It’s a cashflow issue that is quite significant for a medium-sized company, not just a one-off event.”