Construction bosses are considering how to get through one of the toughest winters they have ever faced
The mood has changed. Just a few weeks ago, as we clung to the last warm days of summer, there were cautious murmurings of recovery – we were starting to imagine a world where children were back at school and office workers would return in increasing numbers to city centres. When Building spoke to people in the industry at the tail end of August talk was of finding the opportunities ahead, and if not exactly full of optimism there was at least a healthy dose of positivity around.
Then, on 22 September, came Boris Johnson’s bombshell: rising infection rates triggered a new raft of restrictions in England, a reversal on the guidance for office workers who now were told (again) to work from home if they could. Worst of all, we were told this could all last for another six months. Just as we thought we were emerging from enforced inactivity, the brakes were slammed back on, leaving an overwhelming sense of “here we go again” but this time with the prospect of a bleak winter ahead.
For those with school-aged children, the usual winter coughs and colds now come with a metaphorical tap on the shoulder to get a covid test and then isolate the family while you wait days for the all-clear. So the juggling act of home-working and home-schooling continues for many.
And if all that is not enough to depress you, this week’s news that the official global coronavirus death passed one million might just do it.
But what does it all mean for construction? And how bad, or not, are things looking? Building took more soundings from the industry this week, and while views are mixed, there is a consensus that the market is as bad as it has ever been.
T&T boss Vince Clancy compared it to the 2008 global financial crash, but crucially back then people knew that eventually liquidity from the banks would return. Dealing with the unpredictability of a pandemic is something else. And while all sectors have been hit, Clancy says aviation along with oil and gas have suffered most. Still, it is encouraging to hear him say that the consultant has made minimal redundancies in a bid to keep capacity for when markets do come back.
For some smaller companies, Rishi Sunak’s intervention is too little, too late. Payroll decisions had to be made weeks before, meaning some jobs have already been lost
Others have taken some solace in the chancellor’s winter economic plan. Calls for the government to provide some form of help for businesses after the furlough scheme ends this month were heeded, albeit with the much less generous job support scheme. Still, there is a view among the bigger firms that furlough, while crucial for construction firms in the dark days of April and May, is not widely needed now and it is probably right the employer takes on a larger share of the costs.
For some smaller companies, however, Rishi Sunak’s intervention is too little, too late. Payroll decisions had to be made weeks before, meaning some jobs have already been lost, while the idea of paying 55% of someone’s salary to get 33% of their time just does not make sense to others.
Putting the complexities of state aid to one side, perhaps the biggest concern for some is that a second wave could lead to a second lockdown. A full-scale national lockdown is unlikely, but already we see that whole regions such as the North-east are experiencing stricter measures than elsewhere, and London is now on the watch list.
But even if there were a second lockdown, it would not lead to the knee-jerk shutting down of sites that happened in March, and materials supplies would not be halted in the same way. No one was prepared for lockdown in the spring, but they are now. That said, construction is not immune to the economic effects of such a scenario and lockdown or not, what everyone knows for sure is there is less work out there, with clients either deferring or cancelling capital spending.
Another pressing matter keeping construction bosses up at night is the nagging uncertainties surrounding Brexit. As political pundits keep telling us, the next couple of weeks are crucial and will decide if we crash out of the EU with no deal. Some, like Steve Beechey at Wates, are worried by the complexities a no-deal would mean for deliveries to sites and in his view the government is not giving out much confidence it has a plan B. But for others, the plus side is that either way we will finally know the outcome soon, and at this stage some are still holding out hope a deal can be done.
So, all hope has not been snuffed out. Clearly the disruption construction faces is of historic proportions, and the climb back to previous activity levels is huge. But on the other hand, the industry is now better placed to manage the challenges the coronavirus will continue to bring, a vaccine is getting closer by the day, there could yet be a Brexit deal and, no small matter, construction itself is an industry famed, thank goodness, for its resilience.
Business leaders are no doubt preparing for the worst but hoping for the best, as we all should – after all, who knows what is round the corner?
Chloë McCulloch is the editor of Building