This week is a perfect time to raise the question thanks to some of the headline figures in the latest NCE Consultants File, published with this week’s issue.
It reveals that, while the past five years have witnessed great turbulence in the UK market, the total overseas turnover of consultants has more than doubled. Between 2007 and 2011, the 240 consultants that submitted details to the File have increased overseas turnover from £2.28bn to £5.8bn. On top of that a quarter of the fi rms reported an increased workload outside the European Union in the past year.
It all sounds pretty healthy. Except, perhaps, when considering how contractors are faring by comparison. In recent years the NCE Contractors File has refrained from detailing overseas turnover from this sector because only a small handful of contractors have had any significant presence abroad. There was, of course, a time when this was not the case, and many more contractors than the likes of Laing O’Rourke and Balfour Beatty, who continue to remain active abroad, could also boast of global expertise. But what has changed?
“There are no competitive barriers — not to working in Europe, at least,” says Civil Engineering Contractors Association (Ceca) director of external affairs Alasdair Reisner.
But maybe it’s about whether the UK contractor can compete: “How do UK firms set themselves apart in markets abroad? That is the million dollar question,” he says.
There are no competitive barriers — not to working in Europe, at least
Alasdair Reisner, CECA
It’s about being able to demonstrate you have something that local firms are not capable of, which they can in many circumstances, says Reisner, but he also recognises that in recent years they’ve not been too great at selling themselves overseas, except perhaps in Ireland.
But is it a failure of contractors to market their abilities, or is it just that they are not even taking part. Anecdotal evidence suggests that this could be true. Qatar has been a place where UK consultants have been on a winning streak of late, but UK contractors are failing to piggyback on that success. One senior figure at Qatar Rail told NCE that, while consultants had been all over its high speed rail project, not one UK contractor appeared in the 60 consortiums bidding for the billion dollar design and build tunnel and station box work.
There is no underestimating the relative difficulties of mobilising a contractor’s workforce in far flung places compared with consultant resources. But historically it was made possible.
Big bucks close to home
Added to which, it is not just the far away emerging economies and the Middle East where the big bucks are on offer for civil engineering contractors. The Fehmarnbelt Crossing between our European neighbours Denmark and Germany is also on the lookout for diverse international contracting expertise for its billion pound tunnelling contracts — among other work.
Geography shouldn’t be a problem and the technical, contractual and working language on the £4.6bn scheme will be English. However, while many Continental contractors turned out in force for last month’s industry day in Copenhagen, of the 500 attendees, few represented UK contractors.
In the UK, all of the major projects of the last few years have awarded lucrative work to Continental civil engineering firms — particularly from Spain, Germany, the Netherlands and France — and often in partnership with UK firms. It will be interesting to see whether the UK partners of these Continental companies will exploit these partnerships when the Fehmarnbelt tender process begins after the summer.
One of the ways many UK consultants have recently sought to gain a more solid global footing in the major projects sector is from the recent trend towards one-stop-shop formations — frequently via the acquisition of UK firms by US or other international giants.
But for scheme promoter Femern, project managers are less attractive as suitors for its design and build contracts, and it will favour more traditional contracting expertise.
If contractors get the timing right and can learn what the client needs you can map what UK capability is required
Kevin Thorpe, UKTI
And that is something that export promotion body UK Trade and Industry (UKTI) believes UK contractors will be able to demonstrate. UKTI sectors group business specialist Kevin Thorpe says that, while there is always pressure on major projects to use local resources, he is “very optimistic” that if contractors get the timing right and can learn what the client needs you can “map what UK capability is required”.
He adds that UKTI has a significant presence with Fehmarnbelt as it is part of a wider UKTI initiative that stretches globally. It launched its High Value Opportunities programme around a year ago that was the culmination of wide ranging analysis of global opportunities identified as having great potential for UK businesses. Of the 55 opportunities being pinpointed, 19 are in rail — showing how firmly rooted these prospects are in the civils sector.
Ceca’s Reisner says that such high level promotion could trigger a resurrection of UK contractors working abroad: “If government pushes it, business will follow.”
And government has been overheard repeating the “exportled recovery” mantra. It will be interesting to see if UK contractors will be able to forge a wider path for themselves abroad in the coming months or whether it remains too high risk a strategy in an already tough world.