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Poor rail demand drags down infrastructure workloads

Atkins is to focus on the role of technology in its growth plans

A drop in railway workloads has contributed to a drop in orders for UK infrastructure firms for the first time in five years.

Depressed demand for railways work meant that a balance of  4% of firms experienced a drop in workload, with 35% reporting falls and 31% saying it had increased. In the fourth quarter of 2016, the overall balance of firms reporting an increase in workload for infrastructure had been 11%.

On railways work alone, a balance of 32% of firms reported lower orders in the fourth quarter of 2017 compared to the same period a year earlier.

Rail Industry Association (RIA) chief executive Darren Caplan said the survey’s results were “disappointing” and showed the need to end the “boom and bust” culture of rail investment.

Five out of 10 sectors which took part in the Civil Engineering Contractors Association’s (Ceca) Workload Trends Survey for 2017 Q4 saw more firms report a drop in workload than an increase.

On Monday, MPs heard how rail suppliers are keen to see an end to the “boom and bust” of five-year funding cycles, as rail bosses gave evidence to the Commons transport committee’s inquiry into rail funding.

Commenting on the reduction in infrastructure workloads, Ceca director of external affairs Marie-Claude Hemming said: “Our hopes are that the decline in workloads during 2017 Q4 are representative of a pause in activity, rather than a sign of broader decline.

“Nonetheless these statistics reinforce our concern that rail activity is far below where we might have expected it to be at this stage of the investment cycle.”

RIA CEO Caplan said: “This is a graphic illustration of the impact the ‘boom and bust’ funding of rail investment is having in the UK, where rail suppliers see large ramp-ups in workloads in the early part of the five-year Control Period before steep drop-offs a year or two later. Not only does this make renewing and enhancing the railway more expensive, but for rail suppliers it results in freezing recruitment, making redundancies and cutting back on innovation and training.

“Given rail’s standing in today’s survey, it is clearly time for the industry – the government, Network Rail, the Office of Rail and Road, suppliers and other key rail organisations – to come together to work out a way to end ‘boom and bust’.”

The local roads sector experienced the second worst decline with a 24% decrease in firms reporting improved order books, year on year. Communications saw the biggest increase with a 28% jump, while preliminary works, gas, and water and sewage experienced rising demand compared to 2016 Q4.

Despite the depressed demand in the last quarter, firms are more optimistic about future order books. A balance 28% of firms surveyed expected workloads to increase over the next 12 months, compared to a balance of 23% in Q3.

 

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