Analysis by the Construction Skills Network has revealed that there will be little or no construction growth by 2012. Sir Michael Latham explains why getting to grips with forecasting data is essential for future business

Most small building firms are not interested in construction statistics. The only figure that concerns them is whether their business is making any money. But bigger firms, and large clients of all kinds, do need to know the overall workload now and the likely requirements over the next few years. They can then assess whether they will be able to meet the predicted demand. The big firms also use the smaller firms as their subcontractors, and the SMEs produce 90% of site delivery. Statistical projections do matter to all contractors, whether they realise it or not.

It is good that the Construction Skills Network (CSN), of which I am the chairman, which published its annual report a week ago, is proving such a useful innovation. Its membership ranges widely, and includes employers, training providers, federations and industry experts, from Balfour Beatty to Job Centre Plus.

It was launched in 2005, and is producing excellent analyses of output across the country, and valuable forecasting data.

This year will see CSN looking at more supply side information in depth, including a clearer picture of training provision and more knowledge of capacity requirements, with a better understanding of the balance between the industry’s supply and demand.

Some of the CSN’s calculations are particularly important. About 88,400 new workers will need to be recruited into construction each year between now and 2012. The current workforce this year is expected to be 2.6 million. By the end of 2012 it will be 2.8 million. There will be 292,350 wood trades and interior fit-out people this year, but 319,330 in 2012.

Roofers will increase from 41,850 this year to 45,500 in 2012. Construction professionals and technical staff will grow from 287,690 to 306,060. By 2012, the output of the UK construction industry will be nearly a third higher than it was in 2000. So, real progress.

It is not all good news. The projection for the period 2007-11 is 2.6% average annual growth. But for 2008-2012 it is forecast as 1.7%, significantly less

However, it is not all good news. The industry will continue to expand between 2007 and 2011. But 2012 is predicted to be a year of little or no growth. The Olympic work will have been effectively completed then, which will bring the average growth rate down. The projection for the period 2007-11 is 2.6% average annual growth.

But for 2008-2012 it is forecast as 1.7%, significantly less.

Why should this be? There are a number of reasons. The London Underground Victoria line, the East London line, and the Docklands Light Railway expansion work are intended to be completed to coincide with the Olympic Games, so that London can avoid traffic chaos during the Games, and the athletes and spectators can get to the Olympic park. But widening of the M25 will be suspended in order to avoid disruption to the huge influx of people visiting London in 2012. The forecasters also expect a continuing strong period for office development in London for the next couple of years, because of work already planned and in progress, but they think it may tail off beyond 2011.

Other regions of the UK may also see a slowdown in 2012. In Scotland, most of the growth is expected to be over the next two or three years, with broadly static output in 2011/12. Scottish social housing is predicted to slow after 2009 and private housing is already in problems, though likely to expand again in the longer term. The north-east of England is judged to have an annual construction growth rate of 1.1% over the 2008-2012 period, which is slightly lower than the 1.3% forecasts for 2006-2010 and 2007 to 2011. However, 2008 is expected to be a good year for commercial construction in the North-east, especially with the £200m redevelopment of Gateshead Quays, scheduled to start this year and three other large development programmes in Stockton-on-Tees, Middlesbrough and Hartlepool.

CSN’s report gives a national snapshot of different construction sectors over the next four years. Infrastructure will be a major leader, with an average growth rate of 5.7% per year between 2008 and 2012. This includes wide-ranging schemes all over the country, including redevelopment of train stations at Birmingham, Reading and Nottingham, the Scottish Transport Investment Programme, power station projects in Pembroke and Newport and (hopefully) the start of Crossrail in 2010. Things look less promising in repair and maintenance, industrial and commercial, with predicted annual growths of 0.6%, 0.5% and 0.9% respectively. School building should go well (3.7%) and public housing is forecast to grow at 2.9% per year. Plenty of work – but the most diversified and well-trained companies will do best.