ConstructionSkills (CSkills) warned that the industry still faces a tough year in 2011 with employment levels likely to drop by up to 76,000 before the sector returns to growth.
The warning comes with the release of the Council’s latest Construction Skills Network forecasts for the 2011-15 period. ConstructionSkills has also outlined how it will support the construction industry with a Five Point Skills Plan to promote growth.
CSkills, which releases the data on a yearly cycle, is hopeful that the Government will now take action in the 2011 Budget to support skills development and help create stability for the sector through investment in core infrastructure, noting that the industry has already committed to play its part in putting in place the Government’s "Skills for Growth Plan,” which is also set to aid recovery.
The Construction Skills Network (CSN) report shows that, despite the industry performing better than expected in 2010; the sector is expected to contract by 1% during 2011 which could have a detrimental impact on an industry which is already struggling to deal with the effects of a prolonged downturn.
Responding to the forecasts, ConstructionSkills has issued a Five-Point Skills plan for Government and industry, which looks at productivity, low carbon, increased engagement, recruitment and education and training as a means of working to help protect and grow the sector’s skills base.
Judy Lowe, Deputy Chairman of CITB-ConstructionSkills, said:
“The next couple of years will be really tough for the industry. But as the CSN forecasts show, there are signs of longer-term confidence returning to the market. Major infrastructure investment has been announced, particularly in rail and water, and work is starting on the Cheese Grater, the Walkie-Talkie and Darth Vader’s Helmet – exotic names, but proof investment is being made.
“As the SSC for the industry, we have a real role to play in supporting construction through these difficult times. Our objective is to help the industry maintain existing abilities, develop low carbon skills and meet the demand for new talent. Government support will help to ensure that we all have the right foundations in place, ahead of the recovery.
Whilst news of a slowdown in 2011 will inevitably come as a blow for recession hit employers, the report outlines that the initial decline will be followed by a period of stabilisation and sustained recovery. CSN data shows that output will grow steadily between 2013 and 2015 – expanding by an average of 1% across the whole forecast period.
This means that by the end of the five-year cycle, output is predicted to be 6.2% above forecasted levels for 2011. It will also mean a total of more than 200,000 new workers will be needed to complete planned projects, with an average annual recruitment requirement of 43,000.
Buoyed by Government spending
The CSN forecast shows that, over the past 12 months, the construction industry has been buoyed by Government spending on housing and infrastructure and grew by between 4% and 5%. But because of reduced work values – with firms completing projects for lower prices than in previous years – the figures show that there was little change to the industry’s output in 2010 when compared to 2009.
The Council said that businesses may continue to feel this type of pressure over the next few years, as increased competition for fewer contracts is likely to drive down margins even further. Against this backdrop, the prospects for different UK regions and sub-sectors of the industry vary noticeably between 2011 and 2015.
North/South divide
Figures show that regions such as the East of England, the South East and Greater London will experience higher than the national average annual growth (at rates of 2.4%, 2.2% and 1.8% respectively). Meanwhile, industries in the North West, the North East and Yorkshire & Humber will all shrink between 0.4% and 0.6%.
Private sector housing and the industrial and commercial sectors will be the main drivers for the industry over the five-year period, each contributing more than 4% average annual growth. In contrast, following strong growth in public sector housing and public sector non housing in 2010, both of these areas will decline sharply between 2011 and 2015, posting average annual contractions of 5.6% and 12.4% respectively.
Growth in infrastructure and low carbon
As in previous years, infrastructure projects will also play a key role in keeping the industry afloat, with the continuation of developments such as Crossrail in London, the M74 in Scotland and the Manchester Metrolink.
Additionally, an area of growing importance for the sector in the latter part of the 2011 – 2015 cycle is likely to be the increasing number of ‘green’ contracts. These include new eco-friendly energy plants and retrofitting buildings with energy-efficient fabric and technology.
The full Construction Skills Network 2011-15 report can be downloaded at www.cskills.org/csn