From stock shortages to the skills gap, the construction industry has faced all manner of challenges due to the Covid-19 pandemic and Brexit. Adrian Buttress, managing director at PermaGroup, discusses his approach to the ongoing crisis and how he’s been tackling it head on
While the construction industry has seen its strongest growth in more than 20 years – with consumers and businesses alike taking the opportunity of lockdowns to complete building work – supply chain issues and lack of transport drivers paint a different picture.
Extended product lead times and Brexit based delays are plaguing the industry and no one could have planned for the disruption experienced over the past two years. When combined with the fact that 22% of the construction sector being aged between 51-60, according to the Chartered Institute of Building, the ageing workforce adds a longer-term skills gap issue that companies need to invest in now.
However, with external challenges expected to continue into 2022, there are ways businesses can equip themselves, and their customers, to ensure a delivery of service that’s as efficient as possible. Through a proven three-pronged approach, tackling stock, upskilling the workforce and prioritising customer retention, organisations have the potential to not only prepare for but also prevail over the challenges expected this year.
Falling short
Material shortages have been one of the most widely discussed topics in construction over the past 18 months, with 71% of contractors reporting short supply at the start of 2021, according to the Builders Merchants Federation. Key building materials including steel, roof tiles and timber have been increasingly difficult for contractors to access since Covid-19, which saw many aspects of the supply chain slow down manufacturing or stop completely. In some countries, the industry is only just starting to operate again, while dealing with the backlog of orders, which in turn is increasing global lead times.
Additionally, the situation has been compounded by the effects of Brexit, with full border controls leading to reduced EU imports. This has meant less stock is getting to the border and being delivered to distributions centres.
Initially, it appears there is little that can be done to overcome the supply issues, however, by purchasing in bulk now, where possible, it can reduce future demand issues. Investing in large quantities of stock, such as EPDM rubber roofing, well in advance of winter when customers are most likely to require it, can ensure a steady supply during those crucial times. While this may push up storage costs in the short term, it will go a long way towards futureproofing your profits down the line.
Strong working relationships are also integral to success in difficult periods like these. By maintaining strong relationships with suppliers, you can be made aware of issues at the earliest possible stage and develop a recovery plan. In some cases, suppliers will also allow you to secure old rates, which is invaluable to businesses as it means additional costs aren’t felt by themselves or consumers. Building strong channels of communication can make or break a business in the current climate.
Mind the gap
Currently, there is a vast skills gap in the sector, with the Office for National Statistics (ONS) finding that construction employment is at its lowest level since 2013. An ageing workforce is seeing more skilled workers retire, and the pandemic caused many younger generations to pursue other career choices as the sector was forced to largely shut down, or streamline, in lockdown.
Previously, the industry has relied heavily on overseas workers but between 2017 and 2020 the ONS reported that 42% of EU workers chose to leave the sector. Tighter constraints following Brexit have led many people to move back to the EU as it’s more difficult to gain the right to live and work in the UK, leaving the construction industry with a depleting workforce and extended project delivery times.
The Construction Skills Network predicts that the industry will require 216,800 new workers by 2025 to meet demand. Recruitment is presenting a challenge across all sectors in the country currently, but by establishing courses, such as CPD seminars that provide the opportunity to develop, you can work towards a skilled workforce for the future.
Online and in-person training courses count towards CPD requirements and are a way to engage both current construction employees who want to enhance their skillset, and the next generation entering the industry. Continued investment in training ensures businesses will be supported by a well-equipped team and will improve the quality and quantity of applicants for construction roles.
Rewarding loyalty
Knowing which customers’ orders to prioritise when you have stock issues is a challenge within itself. As all suppliers are facing significant delays, many customers are using alternative companies to source their products, particularly if they are promising shorter lead times. Equally, suppliers are losing customers who they are struggling to provide orders for, leading to a potential customer crisis, despite such high demand.
Rewarding loyalty is one way an organisation can combat this issue by prioritising orders from repeat customers. As they have an established relationship with your business, they will more likely want to continue to work with you, whereas new customers don’t have the same invested interest.
There are a few simple ways to encourage customers to remain loyal. For example, allocating future stock to them goes a long way as it means they can plan and, as a result, so can you. Furthermore, where suppliers are holding old prices for your business, continue to hold these prices for your customers, and don’t be tempted to inflate them prematurely. While this will inevitably happen in the coming months, the later you introduce a price increase, the more understanding customers will be.
Creating customer initiatives is another strategy to help maintain customer loyalty while simultaneously supporting long-term business goals. For example, at PermaGroup, we launched a rewards scheme whereby customers gain points for purchases, which can then be redeemed on future transactions, creating an incentive and encouraging repeat customers.
While separately, these kind of incentives may not reap rewards immediately, being transparent, open and honest with your customers, merchants and stockists will inevitably pay dividends in the future.
Pulling together
Above all else, the challenges we expect to face in 2022 are not individual, they’re felt sector-wide and, as such, are best tackled together. For the year ahead, we are in the fortunate position to have foresight and be able to plan, which is not something we’ve been able to do since 2020.
Sharing stock allocation, supporting training opportunities and maintaining good relationships across the supply chain will be the difference between succeeding and failing during these uncertain times but I have no doubt that, as an industry, we will bounce back stronger after all of the experience we’ve gathered over the past two years.
