Fragmented construction industry

Arriving back from Dubai last week, Europe seemed a cold climate, in more ways than one. The Middle East is coming out of recession with major projects in the UAE, Qatar, Saudi, Lebanon and Iraq. Europe by contrast is in the grip of a triple-dip recession with no end in sight. The Greeks cannot earn their way out of debt, Spain has finally launched an austerity budget, the UK’s plan of an export-led recovery has failed and there is no eurozone political leadership to resolve the crisis of the euro.

This is a time when we should be working hand in hand with the government to restart our industry, which is acknowledged as failing. The government plays a crucial role in the UK construction industry. It forms the regulatory environment, develops policy to stimulate the economy and commissions £46bn of capital works (40% of our work) each year.

When Michael Heseltine headed the Department of the Environment, he gave a clear message to our industry. We have over 300 institutes and trade bodies but the government wants to speak to only one body. In response Ted Happold with others formed the Construction Industry Council in 1988 which attracted over 30 institutes and trade bodies representing 25,000 firms and 500,000 workers. However, despite (or perhaps because of) all the professions joining the CIC, the contractors, specialist contractors and components manufacturers did not join. So, no single voice.

The 1994 Latham report tackled this subject again, and after the Construction Industry Board failed, the government set up the Strategic Forum for Construction in 2001 to pull everyone together. If you won’t do it yourselves, we’ll do it for you. It’s had some very distinguished chairmen, not least Nick Raynsford, Sir John Egan and Peter Rogers and has done some good stuff - most recently the Olympics Construction Commitments. But it is now failing as a single voice mainly because major contractors have found the CBI’s Construction Council to be a more effective way of talking to government; a more effective way of getting the business message across. The contractors are big (and small) businesses with shareholders interests’ to uphold and profits to chase. Their primary mission is business and competitive advantage. Nothing wrong with that.

The Middle Eastern tale of the scorpion and the fox comes to mind. You may recall they both wanted to cross the river. The fox could swim but could not see the way in the waves. The scorpion could see the way if it sat on the fox’s back, but the fox was afraid the scorpion would sting him. “Why would I do that? I’d drown too,” said the scorpion. And so they set off. Half way across the scorpion stung the fox and they both started to drown. “But why?” asked the fox. “Because it is in my nature,” replied the scorpion. The government is the scorpion in this tale. It can’t stop talking to the “big beasts” in the construction companies, either through the CBI or direct. Ministers love talking to the big characters that they think run and shape our industry. But it’s not like that, it’s more complex, and they are undermining the possibility of having any body that speaks with a single voice after having hammered out an agenda.

We’re in the grip of a vicious circle. Why wouldn’t contractors talk to government directly if they will listen? Why would a contractor want to negotiate a position with professionals and others when he can go direct? Where would be the business advantage in that? It’s a fair point.

Let’s stand back and have a look at the scene. The construction industry has a turnover of £122bn (over 7% of GDP), has over 350,000 firms and employs 2.2 million people. Yet unlike other industries it has no effective forum where all the constituent parts come together to thrash out issues of the day. Our industry is fragmented, uncoordinated, riddled with a lack of trust, non-client focused, inefficient and expensive. Add to this a government call for a 20% cut in cost and an 80% cut in carbon by 2050 and we have the biggest challenges set within the biggest recession that our dysfunctional industry has seen. Yet we argue our individual corners for a piece of the pie.

I believe we need to have vision and rise above this; the whole needs to be greater than the sum of its parts. We need a forum where we all come together to discuss the important issues of the day and then speak with the government and others. But it’s not going to happen if we just hold onto our personal sector’s interests. Maybe we’re the scorpions.

Jack Pringle is MD at Pringle Brandon Perkins + Will and chair of the Construction Industry Council