2015 – The year of the specialist?

January 20th, 2015 Posted in: Lakesmere

Although the dark clouds of the recent recession have not yet faded from memory, there is definitely something new on the horizon and it’s refreshing to say that the overall outlook for 2015 is a positive one.  Taking advantage of these new opportunities and growth areas has to be at the top of any specialist contractor’s list of New Year resolutions but it’s going to take more than just optimism to manage the industry’s potential growing pains.

2015 is already shaping up to be a year of investment and opportunity and the housing sector in particular is likely to continue to thrive over the next 12 months as more land is released and earmarked for large housing developments. Further investment in road and rail infrastructure projects to support this housing boom is also going to present major growth opportunities in both the capital and the north of England. It’s likely that this investment plan will underpin the overall market optimism and help spread the wealth to maintain an increase in construction activity and investment in most major UK cities.

It’s clear that London is set to remain a major growth area, as it continues to be fuelled by both UK and international investment in the high-rise residential and commercial building sectors. This will see a huge need for façade specialists that can deliver flexible complex cladding and glazing solutions, however there is no escaping the fact that there is a major supply and demand issue here.  Unfortunately many UK specialists are still recovering from the recession and have neither the resources nor the investment to adequately support this growing market but the opportunities for the handful of UK specialists that are prepared for such a challenge are vast.

Adding to the massive increase in London- centric workload, there are now signs that the recovery is already spreading to other major cities such as Birmingham, Manchester and Leeds with significant city centre projects now going ahead that will be on site in 2015/6. The real implication of this regional growth is that there is a further risk of many London-based contracts being under resourced as specialists that have been migrating to the capital but are based in the north of England find it easier and just as profitable to source work locally.

As specialist contractors become more in demand, supply chain relationships are likely to be affected. Clients, developers and some of the bigger main contractors appreciate that 2015/6 will present them with a massive challenge to retain resources and specialists and many are trying to ring- fence opportunities with their preferred subcontractor base in the hope that they can keep loyalty and support to deliver the work going forward. There is the chance that this scenario could contribute to a ‘perfect storm’ by mid 2015 when the demand for specialists reaches its peak and clients are forced to stop projects because they cannot guarantee that they will be able to resource the construction going forward. On a more positive note here is also the possibility that closer collaboration between clients and preferred suppliers will give the specialist sector the investment and opportunity it needs to fully recover and grow. As growth breeds innovation which in turn creates added value, the situation could ultimately prove to be win-win for both the specialist and the client alike.

Another inevitable consequence of the predicted bull market and booming economy is likely to be an increase in both material and labour costs.  There are already indications of big price swings in London for materials such as bricks, aluminium and glass and interest rates could potentially be pushed up because of such inflationary market trends.

Set against a backdrop of clients and main contractors who are likely to be extremely careful not to over commit and fail to deliver, the opportunities for specialist to take advantage of being ‘in demand’ are present but as always, not without potential obstacles. The main challenge will undoubtedly come from the international contractors from both Europe and the Far East and the potential risk is that many consultants and clients will be too quick to overlook UK based companies in favour of the often incorrectly assumed quality of these overseas companies. However hopefully good commercial due-diligence procedures will give all specialists a fair appraisal that will be based on more than just their geographical location.

Of course no one can say for certain how the new year will pan out for the specialist sector and the wider construction industry itself but I think it’s safe to say that the next 12 months are likely to be the most interesting we have seen for decades. At long last the green shoots of recovery are starting to make an appearance but the real challenge for the construction industry now is to nurture that growth and ensure that the resources and skills are in place to support these new opportunities.

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