The latest Scottish Construction Monitor has revealed confidence levels among Scottish builders have fallen in the past 12 months
According to the latest Scottish Construction Monitor the confidence of Scottish builders has taken a hit as fears take hold regarding future work prospects.
The quarterly survey, which is carried out by the Scottish Building Federation, found confidence had eroded within the sector when compared to last year’s figures.
The federation found that the figure slipped into negative territory this quarter, falling seven points from PLUS 2 to MINUS 5.
Slowdown in growth
The issue stems from mounting fears over the pipeline of new work. Statistics revealed strong output in the year to March 2017 across some areas, but significant drops in others.
During this period major infrastructure projects accounted for more than 20 per cent—just under £3bn—of overall output. Comparatively in the 12 months to March 2007 the infrastructure sector of the industry contributed less than £1bn output—equivalent to just 8 per cent of total industry output.
The figures showed in the year to March 2017 the housing sector contributed 19 per cent of total industry output. This figure in 2006/07 was more than 25 per cent. Likewise declines were seen in the private commercial sector, which dropped from 25 per cent in 2006/07 to 18 per cent in 2016/17.
With many major infrastructure projects drawing to a close, building firms remain concerned the industry could suffer a contraction.
Scottish Building Federation President and Managing Director of Orkney Builders Stephen Kemp said: “Many building employers are increasingly nervous about the future prospects for our industry. There is a feeling that the underlying fundamentals of the industry are not nearly as strong as record output figures might suggest.
“We know that a period of record output from major infrastructure projects such as the AWPR and the Queensferry Crossing is about to come to an end. Strip away those numbers and the performance of other key sectors of the industry such as housing and private commercial don’t look that strong.
“As that infrastructure work dries up over the next year or so, we could see the industry suffer a real shock. Levels of industry employment, which have been very slowly recovering, could slip into reverse. I think that is what SBF members are now worried about – hence the reason why industry confidence has declined.
“In reality, the local community and economic benefits provided by these large infrastructure projects are limited. To ensure the long term health of the construction industry and the wider Scottish economy, the Scottish Government now needs to focus on supporting smaller scale projects throughout Scotland.
“Such a strategy will help to sustain building SMEs that are the real drivers of employment and economic added value in Scottish construction. Without this, we could be facing a cliff edge that tips the industry – and the wider Scottish economy – into recession.”
More support needed
William Gray, Managing Director of William Gray Construction Ltd. and a Director of the Scottish Building Federation, said there had been a downward trend in employment across construction firms.
He added: “Here in the Highlands, we’ve seen the local industry workforce drop from almost 11,000 in 2006 to around 6,700 last year. More recently, we have seen industry employment showing some modest signs of recovery. But there has definitely been an over-reliance on major infrastructure projects to sustain the industry.
“We need to see support and investment for housing and commercial projects. Streamlining the planning and building control process would help, as would increasing staffing so they can make decisions more quickly. One solution would be to change the rules so rates don’t need to be paid on new industrial buildings until they actually have a tenant, as speculative building is now at an almost complete halt.”
