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ADAPTING TO THE NEW NORMAL IN CONSTRUCTION
The end of the summer has always been a time of new beginnings – but this year the sense of knuckling down after the holiday season is even more loaded than usual as the industry slowly settles into its new way of operating. The COVID-19 pandemic has forced many businesses to make difficult decisions, often requiring rapid and dramatic changes in order to cope with these unprecedented times. In the final instalment in our series of surveys about how the pandemic has affected our customers and the industry, we wanted to find out how these changes have shaped our customers’ businesses – both now and in the future.
According to the latest Economic and Construction Market Review released by industry analyst Barbour ABI, construction activity leaped forwards in July with £6.3 billion of contracts awarded throughout the month, compared to £3.1 billion in June this year and the £5.2 billion we saw in July 2019. Alongside the Transport Secretary’s recent launch of a new Acceleration Unit, tasked with driving infrastructure projects forward, it appears as though the pieces are in place for the construction industry to take the lead this autumn when it comes to the UK’s economic recovery.
We wanted to see if this positive forecast rings true out on site, so we asked business owners and contractors working in the housing, commercial, infrastructure, industrial, retail and public sectors about their current situations and future projections. These were the key findings:
● 71% of respondents said that they now have no staff on furlough. What’s more, 79% of respondents said that they were almost up to full staffing levels on site, despite restrictive working practices.
● Since the easing of lockdown, 76% of respondents have secured new contracts while 18% have sadly lost work as a result of the pandemic.
● Confidence about managing the risks of COVID-19 is high, with 92% of respondents believing the safety measures they have in place are robust enough to protect their staff from contracting the virus on site.
Whilst surveys can only ever provide a snapshot of what is going on, the results are encouraging, suggesting that confidence in the industry is starting to pick up. However, they also revealed some interesting trends around changes in purchasing habits and identified some areas where uncertainties and factors outside of businesses’ control are presenting challenges.
Redundancies and recruitment
As so many of us have experienced, the Government’s furlough scheme has provided a vital lifeline for many businesses, however with the scheme now tapering off and due to close in October, the threat of redundancy is a real concern for thousands of workers across the UK. Indeed, data from the Office of National Statistics show that between April and June 2020 redundancies averaged at 4.8% per 1,000 workers – up from 3.8% for the same period in 2019 but at this stage still nowhere near the peak of 12.5% during the economic downturn of 2009.
What’s more, this redundancy concern fortunately does not appear to be reflected in the survey results – perhaps because many construction businesses continued to operate throughout lockdown. In fact, the respondents in our research seem to be running at almost full workforce capacity, with comparatively few (26%) having made or planning to make redundancies. Of those that have unfortunately had to let staff go, only 9% have had to lose more than 30% of their total workforce.
While this is certainly encouraging, understandably the confidence does not appear to extend as far as actively recruiting new staff, with the vast majority (73%) planning to maintain current staffing levels. It’s uncertain from the research whether this cautious attitude towards recruitment is connected to the logistics of managing higher workforce numbers on site, but when asked about the biggest challenges to site safety, a recurring theme was clear: maintaining social distancing.
Managing staff on site
While the guidance from the Construction Leadership Council advises maintaining the 2-metre distance wherever possible, it also recognises that for practical and safety reasons there: “will be situations where it is not possible or safe for workers to distance themselves from each other by two metres.”
However, safety and logistics may not be the only reasons that social distancing is proving difficult to maintain on site - our research suggests that there may still be some work to do in changing attitudes, with one respondent describing the challenges of communicating the ‘invisible’ danger of the virus. Another respondent pointed to break times and the kitchen area as being a particular challenge, highlighting the danger of a more relaxed attitude taking over when staff are ‘off the clock’.
Despite this, the survey respondents were almost unanimous in their belief that the safety measures they have in place will be robust enough to prevent their staff from contracting COVID-19 on site. While it is not within the remit of this research to comment on the prevalence of the virus beyond the data supplied by the respondents, this confidence can perhaps be partly explained by the fact that relatively few of the people completing the survey have staff members who have contracted the virus. Only 9% responded yes to this question and of those that did, less than 10% of their workforce was affected.
Changing approach to procurement
While social distancing might still be proving a challenge to implement on site, the research has shown that businesses are adapting more readily to changes in the supply chain – with 83% of respondents now regularly making purchases via a pre-arranged collection time or online. What’s more this trend appears set to continue, with 64% of those surveyed stating that they can see their business continuing with this approach in the long term.
However, the general economic uncertainty appears to be reflected in businesses’ spending habits, with 44% saying that they are making fewer purchases overall. Only 5% of respondents replied that they were making more purchases than previously. Encouragingly though, supply chain relationships appear to have remained strong and 83% of respondents have chosen to continue working with their existing suppliers.
Prospects for the future
Looking to the future, the survey respondents seem to be cautiously optimistic while – admittedly – being tempered by some uncertainties and concerns about the unknowns of the ongoing situation. With 76% of respondents having secured new contracts since the easing of lockdown, 63% of those questioned expect their businesses to grow or at least stay the same in the next year.
However, that does mean that 38% of the survey respondents expect their trading to reduce over the next 12 months, which despite being the minority figure, still represents more than a third of respondents facing a challenging year ahead. Several reasons for this were highlighted by the survey respondents, with the predominant theme appearing to be a general hesitancy to commit to new projects while the threat of a second wave and ongoing delays still hangs in the balance. Despite this, the mood still appears relatively positive, with 77% of those questioned claiming to have the same or better confidence in the prospects for their business.
Overall, the feeling is that the forecasts for the construction industry are encouraging and businesses certainly appear to be galvanising for the next push forwards. Historically, construction has always been the catalyst for economic recovery and with the CLC estimating that there are more than 700 planned investment projects and more than £500 billion of investment in the National Infrastructure Pipeline, there is clear reason to believe that the industry can pull off this feat once again.
We’re always keen to hear what you think, if you did not take part in this survey but would like to share your thoughts, get in contact by emailing us at email@example.com