The supply chain seems to have been caught out by construction’s recovery, it can’t afford to hesitate any longer
After years of being battered with bad news, the industry could be not just forgiven, but in many cases applauded, for treating signs of positivity with the caution of a motorist forced to park in front of London’s Walkie Talkie. But now - ironically just as the UK leaves summer behind for colder days - the thaw in the construction sector looks to have set in for real.
Last week the Office for National Statistics put new construction orders for the second quarter at their highest level in three years - that distant-seeming past when few people had heard of Mo Farah, and there hadn’t been a royal wedding, let alone a royal baby. This week, Building’s annual contractor salary survey shows that over the past year, wages in the vast majority of roles have risen after years of decline, some by a very respectable 4.5%.
Meanwhile, the housing sector’s recovery is now so firmly entrenched that there are serious doubts over whether housebuilders will believe it worthwhile to get involved in the government-advocated privately-rented sector, as the traditional housing market is already providing them with as much work as they can comfortably service.
Construction remains, as ever, heavily dependent on economic sentiment, particularly in the commercial sector - and therefore recovery could always, in theory, be blown off course. But that fact notwithstanding, there is now enough evidence to have more than just faith in a steadily improving market.
There is currently a rapidly closing window of opportunity for suppliers further along the supply chain to ramp up production
That doesn’t mean that the bad news is gone for good. Alongside the positivity, there is mounting evidence that the long-feared problem of being able to service a recovery - warnings that, despite being repeated throughout recession, probably seemed the least of anyone’s concerns - are becoming reality. Senior figures in the housing sector have, over the past few weeks, anecdotally described how some UK materials providers have been caught out by the rapid success of the government’s Help to Buy initiative, leaving them to turn to European manufacturers to bolster supplies. One this week spoke of a brick and block manufacturer that had a two-week turnaround six months ago saying it could not deliver to site within 20.
This situation raises clear questions over the government’s handling of the introduction of Help to Buy, not least about its communication with the industry. But while those questions of responsibility can - and should - be reflected on at length, there is currently a rapidly closing window of opportunity for suppliers further along the supply chain to ramp up production before they are caught in the same situation.
Caution and scepticism have their place, arguably more so in this repeatedly dipping recession than in any other. But for suppliers and installers in areas that still have time to respond, there is enough of a trajectory in the housing market to make expansion now seem not so much like a difficult choice, but a matter of urgency.
The benefits of increasing capacity - for these companies, and in turn for the wider market - are obvious. But the risks if this doesn’t happen - in terms of greater price inflation and more loss of opportunity for UK business - will be all the more damaging the longer that hesitation lasts. The time to act, finally, is now.
Sarah Richardson, editor of Building