Supply shortage is imminent, and the British construction industry is facing a “perfect storm”

Construction industry update

Due to the promotion of house renovation, housing market and new infrastructure projects, construction demand has reached a record level, and the British construction industry is facing a “perfect storm” of increasing shortages of skills and materials.

According to the latest data from the Building Products Association, a trade agency, construction output in May exceeded the level before the pandemic. It is expected that activity in 2021 will increase by 13.7% year-on-year and by 6.3% in 2022.

However, the growth of the construction sector will be limited by the shortage of skilled workers and the sharp recovery of the global construction industry, which will result in reduced supply and higher prices. Key material, Such as wood and cement.

Noble Francis, head of economics at the Building Products Association, said this was “a perfect storm for the construction industry.”

“I have never seen such high demand for construction, but there are still so many supply-side risks and uncertainties in the industry,” he said.

It is especially difficult for builders to obtain imported products, especially those from China, such as copper and steel.

Due to the pandemic, lack of capacity at Chinese ports, and the suspension of one of the ports, rising transportation costs have hit the supply of goods. The largest ship in the world March at the Suez Canal.

As a result, the cost of transporting a 40-foot container from China to Northern Europe rose from approximately US$1,500 in May last year to more than US$13,000 in July this year.

There is also a growing shortage of products made in the UK, especially bagged cement. Smaller companies are most affected by shortages because, unlike larger contractors and home builders, they lack certainty of demand and a long pipeline of work, so they tend not to buy in advance.

In some areas, skills shortages are caused by a sharp increase in labor. Infrastructure work, Such as the high-speed rail project HS2, and the surge in housing construction and renovation projects.

CPA stated that construction activities in July and August will also be subject to “epidemic” restrictions, which will force employees throughout the supply chain to quarantine when they come into contact with people infected with Covid-19.

Labor shortage has increased A sharp decline In terms of the number of EU construction workers on site, especially in London, where more than half were previously from continental Europe.

From the first quarter of 2017 to the first quarter of 2021, as workers return to their home countries, EU construction workforce fell by 51% in the UK and 63% in London.

Since January 1, it is more difficult for construction workers to come to the UK due to the points system. Immigration system, It costs £10,000 per person and requires more paperwork from the employer.

The lack of transportation capacity caused by the lack of drivers has also led to delays in deliveries, adding to industry concerns.

Construction companies are one of the largest users of the UK’s road network. According to the Road Transport Association, the UK has lost 15,000 European drivers this year due to Brexit, exacerbating the current driver shortage.

CPA stated that the undersupply of certain products means that orders often need to be delivered multiple times, even if there are fewer drivers available.

Infrastructure output in May this year was 17.4% higher than in January 2020, and housing completions in the first quarter of 2021 were 21.1% higher than before the outbreak.

The certified public accountant found that the repair and maintenance of private housing in May 2021 was 10.4% higher than in January 2020.

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