The Brexit vote understandably left the construction sector with uncertainty about the future, but as Anthony Harrington discover , Scotland’s resilient and innovative organisations are facing up to the challenges ...
Prior to the Brexit vote the construction market was recovering rather nicely and order books were looking relatively stable across the industry. Now, however, the uncertainty that Brexit has brought to the market risks undermining the burgeoning confidence that the sector was experiencing prior to the vote on June 23rd.
Louise Shiels and Manus Quigg, partners in Brodies’ construction team, remain cautiously optimistic about the future, pointing out that they and their clients have plenty of work on and there are still several major construction projects on the go.
Nevertheless, there is still a feeling of uncertainty across the construction industry about a range of factors post-Brexit vote, such as what might replace EU funding for projects, how the exchange rate might impact upon the cost of building materials, and the fate of EU trades people and construction professionals working in the UK.
"A pipeline of work is crucial to our clients, who are looking to identify where new projects are going to come from, and whether there will be sufficient investment in Scotland to secure a steady stream of work in the future," Shiels says.
"With the pound and the euro threatening to approach parity with the US dollar, anyone importing foreign building materials will already be seeing a substantial price hike on some materials. This is a risk,"
Quigg adds.
"While our clients remain busy, margins are still very tight across the sector, and if the market contracts still further we may well see a return to the position of a few years back when larger contractors were bidding for projects of a size and scale that they would not ordinarily choose to work in," she notes.
On the plus side, the Scottish Government has invested significantly in infrastructure over the past few years, which is good for the industry, though much of this cash has been earmarked to improve broadband communications across Scotland.
"The Scottish Government does seem to accept that it has a critical role in the future of the construction industry, by supporting infrastructure. It has certainly been very supportive in the past few years, however, a number of the really big projects that it has funded, such as the new Forth crossing and the M8 works, will shortly come to an end and the industry will be reviewing where the jobs for those in the industry will now come from," Shiels notes.
On the non-publicly funded projects, one area that is doing very well is that of house building. "The market here generally seems to have come back well. There seems to be a continued demand for new homes and our team is busy helping housing companies to restock their land banks," she says. The student housing market is also seeing plenty of activity.
"Student accommodation at some of the universities was in need of a refresh. These new accommodation projects are seen as a way of providing high quality accommodation and that in turn will be good for the country, attracting students from across the UK and abroad," she says.
Shiels and Quigg say that Brodies is busy providing advice to clients across the sectors about the potential impact of Brexit and what the fallout on particular industry sectors might be.
"We have run bespoke seminars for clients on this and recently gave a speech at an event run by the Association of Consulting Engineers on this topic and the impact of Brexit on procurement regulations," says Quigg.
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