Time to plot a new course?

I have recently spent a fair amount of my time in Europe on business – specifically Poland and Albania. There, the talk is not of recession, it is of vibrancy, excitement and, dare I say it, optimism. The trip was something of a tonic for me as the headlines at home from our industry are more likely to lead you to pick up the phone to the Samaritans rather than to discuss your latest tender.

For those organisations that do not have the opportunity of doing business outside the UK, these are testing times. One developer colleague described going into his bank, with which he had a longstanding relationship, as being more like appearing on the Dragons’ Den TV show. It’s more of an interrogation than a meeting and there’s more negativity on display than at a Barratt’s show home. It is said that only when times are tough is the true spirit of an organisation tested and some in our industry are facing their sternest test for a decade or more. Economic pundits are changing their views faster than garages can change the price of petrol.

Taking a snapshot of the UK market, we are seeing several key issues affecting construction tendering at the moment. To use a sailing/meteorological analogy, those on fixed price tenders are in a safe harbour and will not be seeing much change in the weather. However, with fuel prices affecting haulage as well as production costs we are predicting squalls ahead for those out in ever choppier seas, with a 5-6% increase in costs across the board over the next quarter.

Developers in the retail environment are in stop/go mode at present. They are the supertankers of our industry, taking a long time to plot a new course and longer to start moving forward once they’ve stopped the engines. They know that what they decide now will affect that market in three years’ time, owing to the phasing of planning, design and construction. Earlier this year in the South-east the engines seemed to be in reverse. It is a guessing game as to when we will be steaming ahead again.

Our biggest challenge is not the fuel crisis or even the downturn. It is the thought that our perceived caution and pessimism may drive a whole generation of talent away

The industrial and public sectors are weathering the storm, although pricing is a core issue when the government is so cash strapped, but compared with other sectors of the industry, the sun has got his hat on.

At the time of writing we are not really in a classic “perfect storm” recession as such. Apart from housebuilders and some retail developers who are really suffering, the rest of us appear to be buffeted by a series of gusts and a lack of confidence all round.

It is not yet the time to wrap yourself up in negativism and undo all the good work that you put in over the last decade of growth.

As I have seen in Poland and Albania, opportunities are still out there – you just have to look harder than you did before.

Earlier this year in the south-east the engines appeared to be in reverse. It’s a guessing game as to when we will be steaming ahead again

Can you adapt your services to a new market? Remember how quickly we all became Telco experts when the dotcom boom occurred and everyone was tendering for Cisco server farms?

It should not take a downturn to make you examine your cost base, but look at your day-to-day costs. Does everyone really need a BlackBerry? Encourage everyone to plan ahead for travel as last-minute air and train tickets cost more. Don’t hammer your suppliers; good suppliers help deliver a good service. If you have cash flow problems, tell them and work something out. It is not in their interest to tell the market about your woes, and partnering is about sharing the good and bad times.

I believe that our biggest challenge is not the fuel crisis or even the downturn, it is the possibility that our perceived caution and pessimism may drive a whole generation of talented men and woman away from this industry. We have seen this happen before and we all paid the price, literally, with salary inflation and a draining of the talent pool. Downsizing kills morale, and customers react badly if you don’t seem to value your staff.

Maybe try short-term contracts or interim arrangements – even job sharing can be a solution at this time of uncertainty. You want to keep and attract the best but we are not in the recruitment environment that we were even six months ago.

Maybe now is the time to look at foreign climes. It is easy to forget that our sector has some of the brightest and most valued construction professionals in the world. The disciplines that we have honed over the years are finally being recognised in other countries and business is not just about the US and older economies in Europe. Working for emerging countries can be rewarding at many levels and to be frank, they are keener to look forward rather than bemoan what has happened in the past.