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Construction catches its breath

30 Jun 14 The recovery continues its faltering progress with May proving a disappointing month for contract awards. Let's just hope this is a momentary pause in the ongoing climb out of recession, writes Neil Edwards

The rise and rise of the industry’s fortunes was never going to be sustainable at the rate we saw at the beginning of the year. But is May’s slowing merely a pothole on the road to recovery or something more worrying?

After the highs of April, it was perhaps inevitable that the industry would need to catch its breath sooner or later. Like an athlete recovering from an injury, a rapid return to peak performance was always going to place a strain on muscles the industry hadn’t flexed for several years.

Even so, a fall from almost £5bn in April to £2.8bn just a month later speaks of more than just post-recessionary fragility.

Furthermore, the 721 contract awards recorded by the BCLive league table during the month of May were telling: they show that recovery remains resolutely focused in and around the nation’s capital; that housing is still by far the industry’s most buoyant sector; and that larger, signature projects are still as rare as hen’s teeth.

Indeed, were it not for a last-minute rally from Balfour Beatty securing a £180m infrastructure contract at Heathrow on the penultimate day of the month and Morgan Sindall, Miller and Kier picking up numerous contracts, the top of the BCLive table would have been devoid of companies with over £100m of contract awards.

Balfour Beatty’s Heathrow contract, for the refurbishment of Terminals 1, 2 and 4, clinched the BCLive league table top spot for the company.

Elsewhere, housing was again to the fore. Wates earned its place in the Top 10 with a £59m privately-funded new-build contract in Leeds, Barratt Homes bagged a £35.5m deal at Brooklands Meadows in Buckinghamshire and Bellway Homes picked up the £35m contract to build a number of one-, two- and three-bedroom apartments at Mill Mead Road in north London.

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A round-up of contract awards by sector illustrates the extent of house-building’s dominance in the industry. May saw the total value of housing contracts awarded exceed £963m; education, the second largest sector, trailed behind with contracts totalling just over £600m. Of course, the past month brought with it some additional pressures. First, the working month was shortened to near February-length by two bank Holidays. And then, of course, came the local and European elections.

Europe – or rather, the thorny issue of European migration – was a central issue in these elections and seems to have played a major role in UKIP’s success at the polls. And yet, as UKIP leader Nigel Farage repeatedly insists, immigration to the UK is not in itself a bad thing.

The recession robbed us of many skilled and unskilled workers and we need to replace them. Despite the blip in May, the industry is still on the rise and requires a ready workforce. If we don’t have the skills here, we need to import them. Any restriction on immigration could therefore have an immediate and damaging effect upon the industry’s recovery. Closing UK borders might mean that, instead of simply pausing for breath, the industry would find itself gasping for air.

This article first appeared in the June 2014 issue of The Construction Index magazine, which can be viewed in full at: http://epublishing.theconstructionindex.co.uk/magazine/june2014/

While the magazine is free to view online, a subscription is required to receive you own hard copy every month. This can be purchased for just £35 a year at http://www.theconstructionindex.co.uk/magazine

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