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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.


Two construction firms brave the recession to announce big profits

Despite all the depressing forecasts surrounding the construction industry (the recent GDP figures being the main one), numerous construction firms are announcing profits for 2011.

Last week Galliford Try, Costain and Morgan Sindall revealed big profits and even bigger order books for 2011 and 2012, and now Kier and North Midland Construction has followed suit.

North Midland Construction, who are based at Sutton-in-Ashfield, posted a 34% increase in revenue to £51 million, which is a 10.6% profit. With an expected income of £152 million this year, 2011 is expected to be a good year for North Midland Construction, which of course is good news for contractors living in the Midlands, as bigger profits mean more projects and more jobs.

Kier managed a 2% rise in profits so far in 2011 and healthy order books for the next year. Kier has won £600m-worth of contracts this year and has a full order book for the first 6 months of this year and 80% of work secured for 2012.

Like this story? Read Trio of construction company’s secure big profit for 2011 on Train4TradeSkills News

Balfour Beatty’s big 2011 to cast further doubt on construction GDP figures

Balfour Beatty have followed in the footsteps of three other big construction companies and announced big profits and an increased workload for 2011.

The construction arm of Balfour Beatty have announced that they have beaten new work expectations in the first few months of 2011 and predict a good year. After securing some big construction contracts, such as a big Crossrail contract and a £100m street lighting contract in Cambridge this year, Balfour Beatty are flourishing despite the recession.

This follows the news that a trio of big contractors – Costain, Morgan Sindall and Galliford Try – announced healthy profits and big order books for 2011, despite the uncertain financial times.

Balfour Beatty’s good performance so far in 2011 is good news for the industry, which has had it’s fair share of bad news in the last few years. The fact that the big construction companies are doing so well, will lead to more jobs for contractors all over the UK.

Balfour Beatty’s results are another reason to doubt the GDP figures published last month that slammed the construction industry. The Office for National Statistics (ONS) found that while the UK economy grew by 0.5% in 2011, the construction industry dragged it down and decreased by 4.7%.

Now the Construction Products Association have conducted a new State of Trade Survey and found the market for construction product manufacturers has improved so far in 2011.

The Construction Products Association, who were one of the main detractors and critics of the ONS report, found that 48% of manufacturers reported that sales of construction products rose in 2011 Q1, compared to just 14% in 2010 Q4.

UPDATE: The Office of National Statistics have “revised” their original GDP figures and said the construction industry figures dropped by 4% and not the 4.7% that was originally stated last month.

What do you think? Do you side with the ONS or the Construction Products Association? Let us know and comment on here, on the Train4TradeSkills Facebook or Twitter pages.

Trio of construction giants endure good start to 2011

Wasn’t the construction industry supposed to be in tatters? Apparently not, as new results indicate that this is not the case with the whole industry.

After last month’s GDP figures showed that the construction industry was dragging the rest of the UK economy down, three of the big UK construction companies announce healthy profits, at the same time as office construction in London increases by 137 PER CENT.

Construction giants Galliford Try, Costain and Morgan Sindall have all announced positive results so far for 2011 and are predicting strong forecasts for 2011, despite all the uncertainty with the economy and the challenging financial times.

Galliford Try have already secured 72% of next year’s construction revenue, Costain have confirmed that they have a “robust” order book with £2.3 billion worth of orders and Morgan Sindall say that their performance this year is in line with their expectations.

Galliford Try’s CEO Greg Fitzgerald confirmed his company’s strong performance this year, saying in a statement:

“The housing market has exceeded our expectations throughout the spring selling season and we have continued to benefit from the strong southern bias of our expansion plan.”

Of course, this is only talking about the big construction companies, and a number of smaller ones have struggled or gone bust so far this year due to the tough economic times. But the fact that the big companies are thriving show that the construction industry is not lost and, crucially, they are still managing to win big contracts and create new jobs.

In a further boost for the construction industry in the UK, a new survey by crane drivers Jonas Deloitte has revealed that office construction in London has increased by 137% in the last six months.

The research revealed that 6.4 million sq ft of office space is being built in the capital, compared to just 2.7 million sq ft six months ago. 25 new schemes have started in London in the last six months, as the construction industry is performing strong, despite GDP reports saying the contrary.

What do you think about this news? Let us know and comment here on the blog or comment on our Facebook page. You can also follow Train4TradeSkills News on Twitter and message us there.

GDP figures slam construction industry, but is it really that bad?

It seems as if it’s one step forward, two steps back for the construction industry as recent statistics show that its performance in 2011 is not as strong as first thought.

New GDP figures released by the Office of National Statistics(ONS) indicate that despite the UK economy growing by 0.5% in the first quarter of 2011, construction endured a terrible time, falling by 4.7% in the first few months of the year.

This news will come as a blow for the construction industry, as the situation has seemingly got worse for the industry after the awful winter it endured, with the freezing weather hampering the performance of the industry.

Do these figures tell the real story?

Numerous construction experts have cast doubt over the ONS’ figures. Construction Products Association’s Chief Executive Michael Ankers said:

“The scale of this fall in the official figures is extremely surprising and is not consistent with information from construction industry surveys or the experience of the companies and sectors that the association represents.”

“The indications are that the construction industry performed better in the first three months than the ONS figures suggest.”

I am surprised by the ONS’ report, as other studies analysing the performance of the construction industry found that the industry grew considerably in the first few months in 2011.

The Markit / CIPS UK Construction PMI Index has reported that the construction industry has grown over the first three months of 2011 after a poor end to last year. The report found that the figures were 53.7, 56.5 and 56.4 in January, February and March respectively (anything over 50 constitutes a growth), and the 56.5 rating for February was the highest in 8 months for the industry.

So is the industry really in such a bad state or is it on the up? Yes, the construction industry is expected to endure a tough time in 2011 and won’t start to really pick up and recover from the recession until 2013 and 2014, but there are still big projects being commissioned all over the UK and jobs available.

What do you think – do you believe the ONS’ figures or are they exaggerating the situation a bit? Let us know what you think and comment on here or on the Train4TradeSkills Facebook and Twitter pages.