Confusion reigns over state of construction industry

The construction industry is in crisis. Orders are down. Contractors have gone bust. Construction company announces big profits. A company announces loads of new work for 2011. These are some of the headlines surrounding the construction industry in 2011. But what is the actual state of the industry?

Let’s be frank, even the most hardened optimist can’t say this is the best time for construction industry right now. The recession has taken it’s toll on construction (and every industry, from retail to banking to healthcare) and activity is a shadow of what it was even a few years ago. But is it on the brink of collapse like some critics have stated, or is the industry performing better than most thought for 2011?

The news last week from the Office of National Statistics that the construction industry is in a bad way shocked some people, with official figures showing a 23% drop in new construction orders this year, a 24 year low. Pretty bad indeed. Combine this with the ONS figures in April which found construction activity dropped by 4.7% this year, dragging the economy down with it, and it paints a pretty bleak picture.

But are the ONS figures exaggerating the situation a bit to strike a bit of fear into everyone? The ONS reduced their construction GDP figures last month (from a 4.7% drop to 4%), after numerous construction experts slammed the accuracy of their figures.

Let’s consider the evidence that suggests the ONS’ statistics are a bit off the mark. First, the Construction Products Association, who weren’t exactly a fan of the GDP figures, released a new State of Trade Survey last month. It found that 48% of manufacturers found that sales of construction products increased in Q1 of 2011.

Then we have the Markit/CIPS Construction Index reports for 2011. Bearing in mind that anything over 50 constitutes a growth, the figures for this year from January to May are: 53.7, 56.5, 56.4, 53.3, 54.0. Up and down, yes, but not disastrous by any means.

And then we have the news from the companies announcing big profits: Balfour Beatty, Costain, Morgan Sindall, Galliford Try, Mitie, Wates and Kier are some the companies to announce healthy profits and order books over the last few months. Now these are the big companies in the construction world and some smaller (and bigger) construction companies have struggled to brave the recession.

Or is it like any industry during a financial change? New projects are going ahead around the country all of the time and it will get better as the UK economy continues to improve, the predicted double dip has not happened. What also materialises at such times,in any sectors, is that having the latest skill set enhances the opportunity to secure a job or contract, especially those with a vocational trade.

According to Tim Oates, director of research at the Cambridge Assessment exam board, who in an interview with the Telegraph said, “At least 40 per cent of pupils should take high-quality vocational training that leads directly to a job to cut the youth unemployment rate and boost economic competitiveness”.

 What do you think about the state of the industry – we want to find out what you think. Let us know by commenting on here. Or you can let us know what you think on the Train4TradeSkills Facebook Page. Alternatively, follow @t4ts on Twitter and tell us there.

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