We are seeing the rapid growth of nationalism and popularism – what does this mean for construction’s global ambitions?
Construction made the news again earlier this month, albeit indirectly, when Donald Trump’s US administration put a 25% tariff on imported steel. The impact is not so much that this will adversely affect UK steel exporters to the US – although it will – but that there will be a global fall in the price of steel as everyone outside the US looks to find new markets for their overproduction.
The other main news was that in Italy a populist government has been sworn in – hot on the heels of the increased majority for right-wing Hungarian prime minister Viktor Orbán, and following on from the UK Brexit vote. What these events all show is a move towards a more insular and polarised approach to governance, and as a consequence to trade. In the UK the Industrial Strategy focuses on local wealth creation and employment, and many local authorities have adopted regional procurement strategies for materials and labour. Meanwhile, overexposure to high-risk foreign markets was a clear contributor to Carillion’s demise.
Are we seeing a “blip” in the global free-trade capitalism that we have worked in for as long as I can remember, or are we witnessing the emergence of a new world order? Either way, what does this mean for construction and property companies that have been pursuing a global agenda for such a long time? How will it play out with the multinational companies that form our international client base, and will this lead to more jobs for local people or nudge us towards a global trade war, a political stand-off and yet more economic uncertainty?
What seems to be happening at the political level is a backlash against falling standards of living
It is difficult to see how the imposition of tit-for-tat tariffs is going to benefit anyone. In the short term it may drive up local production a little, but by removing competition and choice it seems unlikely that it will either deliver value or drive innovation – two things that our industry is already harshly criticised over.
I completely get the localism objective – well-paid jobs for local people – but is there any evidence anywhere that forcing the agenda actually works? The two current examples of countries surviving on their own resources (aren’t sanctions the opposite side of the coin to tariffs?) – North Korea and Iran – are hardly examples of burgeoning economies or civil content.
Surely the sustainable answer is to make such a compelling local offer that a client won’t even contemplate going elsewhere, rather than ring-fencing and protecting. This means that both clients and advisers have to understand the true value – including the social, environmental and short- and long-term economic value – of the assets they commission, build and design.
I am also committed to the global perspective. At Rider Levett Bucknall we operate in more than 40 countries and I see first-hand that the learnings we gain from challenges within different markets bring a level of expertise to another region. Staff gain opportunities to become more worldly, spread their wings, experience different ways of working and approaches and bring these benefits back to their local area.
What seems to be happening at the political level is a backlash against falling standards of living – a shout-out from the people to governments, both municipal and federal – to protect local jobs, save local economies and support local industry. The political reaction to this in many parts of the world is protectionism, even nationalism. What the debate should really be about is how we build sustainable, productive, regional and national economies.
Twice in the last month I have seen a microcosm of this debate in our industry. I have been challenged – by both contractors and clients – about the role of quantity surveyors in the construction process: in a nutshell, some clients believe the profession is self-serving and gives advice that will return the greatest fee for the minimum amount of work, while some contractors believe QSs’ obsession with lowest capital cost means they simply perpetuate the status quo while taking no risk.
Meanwhile, Building editor-in-chief Tom Broughton wrote only a couple of weeks ago that the QS marketplace has been turned on its head by highly focused, specialised companies seizing significant market share. So, are we about to see a new world order in quantity surveying? Skilled professionals can add much value to the construction process, but the role the QS can play in changing procurement from a cost-based exercise to one based on value must be one of the most significant.
Which takes me back to the matter of global versus local. Offering the best value solution is procurement working at its best, but to do this advisers must be worldly enough to recognise global best practice and have sufficient local empathy to know what will or won’t work for each situation. Client and end-user satisfaction must dictate the best solution – from a delivery, quality and cost-effectiveness point of view, not rhetoric or politics.
Ann Bentley is a global board director of Rider Levett Bucknall and a member of the UK government’s Construction Leadership Council and the CBI’s Construction Council