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Recovery is three years away, say infrastructure chiefs

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.

Hopes dashed

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.

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Bad times: Delegates heard senior executives map out a gloomy scenario ahead

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.”

Readers' comments (4)

  • The last 3 years have been incredibly challenging for Consultants, so there can't be many designs sitting on the shelf for Contractors to build.

    The USA is increasing Infrastructure spending to create jobs and boost the economy, the UK needs to follow suit before it's too late!

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  • No-one has any money, except the fat-cat bankers and top staff in the big multi-nationals (average 50% pay rises for top bosses reported today by the BBC). Most businesses, banks and governments are effectively broke. As we Civil Engineers are (quite rightly) unwilling to work for nothing, and no-one has money to spend, we have little work. It isn't a surprise to anyone who thinks about it.
    Regarding John Glaister's comment about the USA's infrastructure spending "solution". The USA can;t afford it, they are spending money they don't have, and that they can't afford to borrow.
    Everyone talks about Greece, Italy, Portugal and Spain ... but the elephant in the room is that every Western capitalist economy is in debt more than it can afford to pay back, and is borrowing more money now in the false hope that with a bit of luck, they can climb out of the recession and then once they are booming they will be able to afford at least some of the interest payments.
    The reality is that with the massive borrowing ongoing, the Western economies are flat-lining, and will continue to do so until another recession in 3 to 6 years time.
    Daniel Preston, Huddersfield

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  • The alternative view, as Greece has proven, is that the medicine (spending cuts) can kill the patient - the Greek economy was going into severe decline before the EU reduced their debt this week.

    There certainly will be another recession in construction unless the government intervenes. The market is very competitive at the moment, so there can be no better time for Clients to get value for money from Consultants and Contractors, and to deliver essential infrastructure improvements.

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  • John Mather

    Whilst I believe that we should not buy what we cannot afford, we do need to keep a sense of proportion. The UK's national debt, when I last looked, is a lot less than that of the USA and Japan. It's also less than that of Italy and France. As a % of GDP, it's less than that of many more developed countries. I, for one, would rather follow a positive optimist than a negative pessimist. (Not ready to lie down and die just yet!) It would be good to see some sensible investments in infrastructure with reasonable profit margins for the suppliers. The NIP looks good to me in principle. The ICE is right to ask for supporting detail. We need investments in energy and transport. And I, for one, would like to see the work awarded to UK-based civil engineering contractors and consultants.

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