Construction Liveries Group

Good afternoon Masters, distinguished colleagues, ladies and gentlemen.  A warm thank you for inviting me to be with you today. I am delighted to be here at the Glaziers Hall, for this special event in your calendar - and what a splendid and appropriate venue for this event.

It is always a pleasure to meet colleagues from the Construction Liveries Group, and from the industry as a whole, and to find out more about what’s happening at the sharp end. Today is no exception. But, this time - when Bob Craig asked me to speak to you this morning  -  I was happy to accept not just because I enjoy talking with you all before and after this event, but because we are all in a period of uncertainty and change.

These are very challenging times for our industry. So, I can find out more from you about how the current state of the economy has affected you and your businesses, but also to reflect on the initiatives that this Group is implementing.  I want to share with you my thoughts on some new schemes that are being introduced by Government, the challenges that we face and the effect that they will have on our industry in the short and long term.

Especially since Easter, 2008 has been a tough and uncertain year, not just for construction, but for our country and indeed the world. The economic slowdown has had a significant impact upon many businesses.  We have all seen the media footage of employees from the financial services sector who have bore the brunt of these difficult times. More recently our industry has also started to feel the effects of slowdown and economic uncertainty.  I know it varies from firm to firm, including my own, and indeed it depends on the nature of their workload.  Some are suffering seriously now.  Others may find pain in 2010/11, as existing work comes to an end.

In the early stages of this year, the credit crunch was being felt mostly in the house building sector and sadly, this has led to some high profile redundancies. But unlike the financial services sector, this is not the experience across the entire construction footprint. Ours is a very disparate industry and redundancy is not a consistent picture for us.  Some sectors are still strong, especially school building, hospital building, and infrastructure.  Others are suffering especially housebuilding, but also property development and fit out. 

Each February, ConstructionSkills runs a forecast on the industry through the Construction Skills Network to monitor trends and report on the number of recruits that are needed to meet growth.

After the initial forecast, we rerun the Construction Skills Network report in the autumn to check whether it has changed throughout the year. At the end of September, we ran the forecast.  It showed that the slowdown in the housing market and related sectors has reduced the annual average requirement of new recruits to the industry from 88,000 per year to 42,000 per year between 2009-2013. That still means 210,000 brand new recruits to our industry, which is a significant requirement.

This interim indication, which is based on official data and feedback from the Network’s experts around the country, shows that the “credit crunch” has halved construction job opportunities.

Whilst this is a shocking finding, it is certainly not all doom and gloom. Our findings show that, despite fears in some sectors of the market, the industry will continue to grow over the next few years. In fact, between 2009 and 2013, UK construction is expected to expand by 0.7% annually.  This is thanks to high value projects like the Olympic Park development, the Thames Gateway re-developments, Crossrail and continued public sector investment in services and facilities – such as schools, roads, hospitals and infrastructure as a whole.

Every sector tells a different story.  Our forecasts have indicated that infrastructure is still showing an annual average growth at 6.5% to 2013. Despite the economic slowdown, some parts of construction growth remains strong.

Furthermore, our long term predictions show a bright future for construction. The “2020 Vision” report, which resulted from a research project undertaken by ConstructionSkills, shows that despite the possibility of a prolonged economic downturn, construction activity is set to increase in the long term.   Indeed, by 2020, the industry could be worth £109.2bn in 2000 prices, which is a 31% increase in real terms over the 2007 level. It also highlights future skills trends, including the continuing demand for specialist workers over the next decade to accommodate changing construction methods and practices.

Times are hard now for some businesses. But, this is a hurdle which we will overcome.  This group, and the Worshipful Companies that are part of it, have a strong history, and I know that your companies and mine have overcome much worse than this in the long and distinguished history of Livery. Furthermore, we can be heartened by early indications that show that the construction industry will flourish in the long term, and our workforce will expand beyond the current number of 2.5 million.

This means that more than ever, we need to continue to invest in our industry so that we are able to pick up and carry on business as usual, as soon as the current crunch climate recedes.

In recent weeks, the media have been focused on the reduction of construction job opportunities.  They have speculated that the foreign labour market will have a negative impact on construction job opportunities, exacerbating the current “crunch climate” as we enter a recession. However, this is not necessarily the case. Our research shows that rather than taking jobs which could be filled by UK nationals, the migrant workforce have not caused displacement in the UK labour market. On the contrary, migrant workers seem to have filled new roles within the construction industry. Our research shows that no underemployment has been reported and there has been no significant wage inflation, though there has certainly been cost inflation, especially for materials and products.

What’s more, contrary to media belief that the migrant workforce was extensive it was actually quite limited.  So we do not expect this to have a real impact if Britain enters a period of recession, and, in any case, many people from Eastern Europe are returning home now.

With this in mind, we cannot afford to rest on our laurels.  We need to continue to invest in our industry. There is much work to do and training and development are at the heart of it.

Employers in our industry recognise this. Only last week, Contract Journal published findings from a survey that showed, when asked, that half of the employers in our industry still value training and think, even during these difficult times, that we must continue to train, train, train, so that we are ready to pick up and carry on business as usual as soon as times get better.

There are still skills shortages within our industry that we must address, and so training is crucial. This is a real challenge for us.  The eyes of the world are upon us, especially as we start to deliver projects such as our Olympic developments, which must be well built and on time.  So we need to widen our opportunities for work.

Currently, the construction craft workforce on site is made up of only 1% women and 3% ethnic minorities. Yet, within 10 years, ethnic minorities will make up one half of the growth in the wider UK workforce and women will become the majority.

That being the case, the logic is simple. We need more skilled crafts people year on year. We need to widen our pool of quality new recruits and encourage young men and more women to think about a career in construction. We need to keep the skilled crafts people that we already have in this sector to make sure that our skills needs do not become even more dramatic. And, we need to make sure that we drive everyone within the sector to be trained to the highest standard so that we can ensure delivery of our demanding order book.

As the Sector Skills Council for Construction, ConstructionSkills is already working with Government, employers and Trade Unions to broker the best deal that we can for industry. This is manifesting itself in many ways and the development of the Construction and the Built Environment Diploma is just one example. The diploma gives young people the opportunity to study for a construction qualification, which will give them a basic understanding of the industry and a taste of what it is like working in our fine industry.

This helps us to widen the pool of potential new recruits and attract bright young people who may not have considered a career in construction and also offers many businesses benefits. These diplomas will help us to produce more job ready recruits to the industry. And for those who then want to start a career in construction can join one of our apprenticeship schemes, and potentially knock between 4 to 5 weeks off the duration of a traditional apprenticeship. This is good news for employers and good news for industry, because we get more young people into jobs and working quicker.

I know that this is an ambition that we all share. The Construction Liveries Group is committed to achieving excellence and we all have a duty to promote and set professional standards.

That is why I am delighted to be here now to share the success of some of the people who have achieved excellence in their field. The scholarships offered by the Worshipful companies have a real place in our industry. They help to develop our people and they have a role to play in helping us to qualify our industry and provide a construction workforce to rival all others.

I know in my own company, the Worshipful Company of Constructors that we offer 6 scholarship schemes – and encourage professionals to research and develop as they continue with their day job. I am delighted to see the scholarships and schemes that the Construction Liveries Group offer and your commitment to bettering our industry, deepening its skills base and level of craftsmanship. 

We need more worshipful companies to engage in the same way that yours and mine because we owe it to the people that work for us, the communities we serve and we owe it to our industry.

As Chairman of ConstructionSkills, I believe that our work has many connections with your organisation and my own. We are all individually striving to make sure that this great and important industry that we serve continues to grow from strength to strength. But, we must do it together. Construction is a big industry. Professionals and craftspeople need to work together for the good of our industry to make sure that we cover all bases and improve standards across the entire construction footprint.

Together we can refine our search and seek out quality new recruits – the best our schools and colleges have to offer. It is then down to us to help them to find the best career path for them – whether it is in the craft of professional sectors. And then, it is down to us to hone their skills and help them to become masters of their own professional or craft - and either set up potential new companies of their own, or become leaders of existing companies, and hopefully also joining in Livery themselves.

Training and development is key to this. These difficult times will pass and we need to be ready when they do. We will be asked to deliver ambitious and iconic projects that will be a legacy to the craft skills that we have developed and passed down from generation to generation.

Masters, ladies and gentlemen – thank you for giving me the opportunity to speak to you this morning and thank you for your commitment to construction.

Ours is a great industry – historic, in that it has existed for thousands of years, but also modern and progressive, introducing new techniques and multiskilling.  We have, quite literally, built Britain.  And, in decades to come, people whom we have trained can say to their grandchildren “I built that”.  That is a proud achievement, a proud claim.  And that is what our ancient and our modern Livery Companies still do.