Industry leaders fear that UK civil engineering workloads will stagnate next year and that the negative effects could be felt for up to three years.
Speaking to NCE at last week’s Infrastructure Show in Birmingham, senior construction executives said that hopes of an imminent upturn had been dashed.
They said current work is drying up and that few new orders are in place for 2012.
“Current spending is committed and there is no new spend coming through,” contractor Bam Nuttall chief executive Steve Fox told delegates during the show’s leaders panel.
Delegates said they also feared the effects of a near shutdown of existing work in London next summer ahead of and during the Olympics.
This includes Crossrail work, Tube upgrade work and smaller contracts for utilities and road improvements.
This work is being stopped to prevent travel disruption during the Olympic and Paralympic Games which run between 27 July and 9 September.
An executive at one leading geotechnical contractor, which has won key contracts on major projects, said that while next year’s summer slowdown in London was expected, contractors had hoped that a recovery in the commercial sector and a pipeline of work from the water industry would make up the shortfall.
“The next couple of years are looking incredibly challenging for the construction sector and infrastructure is by no means exempt from that”
Civil Engineering Contractors Association director of external affairs Alasdair Reisner
But he said there was little evidence of this happening yet.
The water industry is in the middle of its AMP5 five year spending period, but compared with the same time in the last five year control period workload is down. Costain water director Graham Keegan said workload could be down by up to 30% on a like for like basis for 2012 compared with 2007.
Civil Engineering Contractors Association director of external affairs Alasdair Reisner said the industry faced a very real threat and that there were real concerns among contractors that the private sector recovery was failing to outweigh the effects of public spending cuts.
“The next couple of years are looking incredibly challenging for the construction sector and infrastructure is by no means exempt from that,” he said.
“There are potentially some major opportunities on the horizon but for the time being they remain on the horizon.”
One project is not enough
While Crossrail will help, Reisner said this one project cannot be expected to balance out the downturn in workload.
In the plant sector the knock on effects of a shortfall in workloads are already being felt.
JCB regional sales manager James Montague said hire firms were holding back on buying new stock as their clients − contractors and subcontractors − are unsure what their workloads will be like in 2012 and 2013.
“We’re not sure what’s going to happen next year,” he said and added that with the slowdown expected following completion of the Olympic Park next year, Crossrail is the only other multi-billion pound infrastructure project being constructed in 2012.
Big energy projects such as Hinkley Point and Round 3 offshore wind are unlikely to begin significant construction until 2013 at the earliest.
Fox said the worry was that firms would struggle to stay afloat. “It’s going to leave the industry in a very different place in the next three years,” he said. “There are a lot of suppliers that are not going to survive it.”