“Ineffective” British firms will miss out on their country’s building boom, expert warns

A forecast of the future of the global construction industry over the next 15 years has predicted that the UK market will surpass Canada’s and Germany’s to become the world’s sixth largest by 2030, driven by the need to catch up on much needed infrastructure and housing.

But a renowned infrastructure expert, Sir John Armitt, has warned that domestic firms will have to reorganise if they are to win the huge projects about to start in their own backyard – and that "foreign intervention" may be necessary.

The growth in UK construction will be driven by the need to make up for long-term underinvestment in infrastructure and housing, according to the Global Construction 2030 report released this week.

It says Britain needs to spend a total of $6.2 trillion on construction over the next 15 years, including 3.3 million new homes, a high-speed rail system and new generation of nuclear power stations, expansion of Heathrow Airport, a second Crossrail project in London and work to build an electrified rail system in the north of England. 

There doesn’t seem to be at the moment the capacity, capability or motivation for the UK construction industry to reform itself– Sir John Armitt, National Infrastructure Commission

But at a panel discussion launching the report, Sir John Armitt, who led the delivery of the London 2012 Olympics and who sits on the UK’s new National Infrastructure Commission, said Britain’s domestic industry was poorly suited to taking on the likely quantity of projects that would be coming to market.

"The weakness of the UK is that it’s very fragmented. There aren’t any big players, by global standards, and therefore I can’t see anything other than consolidation and vertical integration being the answer," he said.

He added: "I cannot understand the construction industry in the way that it separates design and manufacture and European firms don’t have this tradition that we do."

He said this separation led to weak contractors and strong consultants.

"We have consulting engineers who are independent and they are more successful globally than the contracting companies are, but until we bring the two sides of the industry together then I think we will continue to be inefficient and ineffective."

The report praises recent UK governments for their willingness to see through "game changing" infrastructure megaprojects that it says will "fuel growth in the medium to long term".

However, it also notes that the UK government is unlikely to be able to finance the increase in spending, particularly given its austerity policy; at present 70% of work in the country is funded from private sources.

The report also notes the possibility of a funding influx of $169bn from China.

"China’s massive construction companies are currently looking to move their considerable resources into the UK market, one of the most ‘open’ for business in Europe," notes the report, produced by Global Construction Perspectives and Oxford Economics and sponsored by the CIOB.

This influx of foreign companies may ultimately benefit the UK’s domestic industry, according to Armitt.

"It took the Japanese to show people how to make cars and the UK only changed as a result of foreign intervention," he said. "The same thing is going to happen in the construction sector. Until we get that foreign intervention there doesn’t seem to be at the moment the capacity, capability or motivation for the UK construction industry to reform itself."

The report forecasts that, globally, the volume of construction output will grow by 85% to $15.5 trillion by 2030, with three countries – China, US and India – leading the way and accounting for 57% of all global growth.

More information is here.

Photograph: One of the UK’s recent civil engineering triumphs: Crossrail 1 (Crossrail)

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  1. Interesting article. Don’t be over awed by the chunky numbers thought.
    Armitt may be right, but why is he right!!!!
    Perhaps the take overs of Industry names has already happened as a net effect of “dreadful” past Governments playing games with Investment and capital projects.
    The voice that is missing is that of the ICE, CIOB, and others collectively getting press and media coverage and seriously doing something to promote UK companies and IUK company growth.
    Its not all about numbers

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