Construction industry prepares for downturn, warns FMB

Construction industry bosses are reorganising their workforce in preparation for a potential downturn, with higher levels of sub-contracting and lower levels of direct employment, according to new research by the Federation of Master Builders (FMB).

Key results from the FMB’s State of Trade Survey for Q2 2019, which is the only quarterly assessment of the UK-wide SME construction sector, are as follows:

• There was a decrease in employment levels among small construction firms for the first time in more than five years with over one fifth (21%) of employers reporting a reduced workforce;

• After a difficult start to 2019, workloads for construction SMEs grew slightly compared with the previous quarter with more employers (27%) reporting higher workloads than in the first quarter of this year (22%);

• Bricklayers are the trade in shortest supply with nearly two-thirds (60%) of construction SMEs struggling to hire these tradespeople and 54% struggling to hire carpenters and joiners;

• Looking ahead, expectations for the future weakened slightly. Just over one third of construction SMEs (37%) are forecasting higher workloads over the coming three months, down from 41% in Q1 2019.

Brian Berry, Chief Executive of the FMB, said:

“Years of Brexit uncertainty have resulted in construction bosses starting to change how they employ their workforce. To ensure their firms are ready for any economic shock-waves later this year, employers are reducing their number of direct employees and relying more on sub-contractors who are easier to shed if work dries up. The construction industry has always used a significant proportion of subbies but the fact that direct employment is decreasing, points to Brexit nerves among construction bosses. This is the reality on the ground of what happens when years of uncertainty are inflicted on the construction industry. Furthermore, apprenticeship training has taken a hit as construction bosses are reluctant to take on young people when they can’t be sure of future projects going ahead.”

Berry concluded:

“Worse still, the fear is that using more subbies can lead to a drop in the quality of our builds. Direct employees, who are well-known to their firm, are much more likely to follow the ethos of their company and build to the right standard. If construction bosses are trying to protect their businesses by employing more subbies, they might not always know how good these subbies are. Rebalancing the workforce may seem like a good idea at the time, but it could lead to reputation-damaging mistakes. If a downturn is on the horizon, reputation is everything and construction employers can scrutinise the quality of their workforce far more easily when they’re on the books.”