Prefabrication is no quick-fix solution to the lack of skills in construction, warns a new report. It says the UK's approach to training and innovation is lagging well behind other European countries …
A new report by the University of Westminster ought to come with a health warning. The research, due to be published later this year, may cause headaches, depression and anxiety.

First, there's the migraine-inducing title: Standardisation and Skills: A Transnational Study of Skills, Education and Training for Prefabrication in Housing. Then things get really grim. The report says UK construction is lagging behind the rest of Europe in terms of innovation and concludes that its problems – notably fragmentation, lack of training and poor investment – are so severe that they threaten to undermine Egan-style efforts to modernise the industry. In short, it is so ill, the prescribed medicine may not work.

Researchers compared the UK social housebuilding industry with its counterparts in Germany, Denmark and the Netherlands – countries considered to employ advanced production techniques. They found the UK to have significantly lower levels of training and identified a "built-in resistance to change" caused by the hierarchical nature of professional training, which separates the professions from craft-based trades. They say innovation is being hampered by skills, education and training structures in the UK.

Their most striking conclusion is that the problems caused by the lack of skilled workers cannot be solved by greater investment in innovations such as off-site manufacturing – a key reason why many UK housebuilders are investigating prefab systems. The report found that the opposite was true:

a skilled workforce is needed to enable innovations to be brought on stream.

Linda Clarke, project manager of the £356,000 research project says it is a "fallacy" that prefabrication is the quick-fix solution to the loss of skills in construction. "It's an old British problem, the attitude that you can somehow do things without skills," she says.

"There are two key factors for prefab innovation," she adds.

"One, you need a very good foundation; therefore you need a highly trained workforce. But groundworks operatives in this country are unskilled. Two, you need a lot of precision within the assembly process."

During their two-year investigation, researchers studied 18 social housing projects of similar size across the UK and Europe. They identified an alarming gap between skills in the UK and those abroad. Between 70% and 80% of UK construction's workforce is estimated to have no formal qualifications; at least 35% of workers are classified as labourers, compared with 5% in Denmark, 7% in the Netherlands and 17.5% in Germany (see chart).

On the Continent, unskilled workers are becoming ever more marginal as employers increasingly employ only skilled workers who are encouraged to plan and control their own workload without supervision. But here in the UK – where the industry consists of many small firms unable or unwilling to invest in training, or where larger firms increasingly subcontract much of their labour – the number of unskilled workers is increasing.

While UK construction has seen a dramatic reduction in training at all levels – entrants to professional courses fell 40% between 1995 and 2000 and construction trainees dropped steadily during the 1990s – other countries have experienced an increase. In Denmark, the number of carpenter trainees rose 73% between 1992 and 1997. The number of bricklayers increased 114%. There are also striking differences in the proportion of trainees to qualified workers. In 1997 – the latest year for which figures are available – trainee carpenters, bricklayers and concrete workers made up 24% of Germany's construction workforce. In Denmark, the figure was 18.2% and in the Netherlands, 8.7%. In the UK, it was just 3.9%.

The nature of the training also varies greatly. Whereas on the Continent the emphasis is on increasing workers' skills, the UK tends to focus on accrediting existing skills without significant investment in further development. Most trade training in the UK lasts for less than two years, but in Denmark and Germany the norm is between three and three-and-a-half years. Training in these countries aims to impart transferable skills, with workers sampling a mix of trades in addition to core subjects such as science and maths. The latest technical innovations are often included on the syllabus. As a result, trainees in Europe are equipped with more flexible skills than their UK counterparts, who tend to be taught trade-specific skills.

The study criticises the "two distinct occupational hierarchies" in UK construction education, with professional institutions reporting to the Privy Council on the one hand, and state-run operative training bodies on the other – "each operating without regard to the other". This, the report says, makes for a skill structure that is resistant to change.

Innovation in the production process requires great technical expertise, but the UK firms studied had the lowest proportion of production staff to office staff (office staff made up 15% and 21% of the total employees in two German firms studied, compared with between 24% and 63% in four UK firms).

Whereas production is the core skill in Continental firms, the greatest concentration of expertise in UK firms was found to be in cost control. "A key finding is that the cost function – surveying, buying, estimating – is the dominant form of expertise in UK firms," says Clarke. "The production has been subcontracted out."

The report makes much of this point: "The structural imperative of the UK construction industry has become one of controlling costs through overseeing contract relations, themselves circumscribing a range of narrow, clearly defined and priced tasks. Long-term improvements to and knowledge of the production and labour processes have become secondary to this."

On the Continent, cost considerations are incorporated into, rather than separated from, production, which tends to rely on directly employed, in-house expertise. Subcontracting accounts for 29.5% of production costs in Germany, whereas in the UK it is about 50%. As a result, European firms tend to accumulate skills and knowledge, better allowing them to innovate.

All these differences lead to divergent approaches to innovation. Here, innovation tends to be driven by manufacturers of products such as modular systems (for example, bathroom pods), timber and steel frames or components such as prefabricated flooring. Process innovation is secondary. In countries such as Germany, it is the other way round; a workforce trained in innovative processes and strong production skills creates a culture in which the process is constantly being improved.

In Europe, the state also plays a greater role in driving innovation through sustained investment, research, regulations and subsidies. In the UK, responsibility for innovation is placed firmly with the industry, with government playing a facilitating role.

"The premise in the UK is that innovation should be entirely employer-led, on the assumption that the industry can transform itself," says the report, in a clear reference to initiatives such as the demonstration projects run by the Housing Forum and Movement for Innovation.

The study has drawn a mixed response from industry figures who attended a workshop on its findings last month. Housing consultant Norman Bright says it should not be viewed as a problem that innovation is driven by product manufacturers. "While prefabrication has its place, there is a greater degree of innovation coming from construction product manufacturers, which is leading to superior construction methods that do not require prefabrication," he says.

Bright adds: "Although the report is thorough, it is limited in that it only includes social housing and is preoccupied with prefabrication. Therefore it is questionable whether many of the conclusions, other than the shortage of education and training, can properly be extrapolated to the whole of the construction industry without further studies."

Nick Whitehouse, managing director of prefab component manufacturer and contractor Terrapin, agrees with the findings on training. "I think this country is pretty poor at training large parts of its workforce. In Germany, you train for three years to become a concreter. Here, you only have to be able to handle a shovel."

Elanor Warwick, research manager at social housing provider the Peabody Trust, believes that the findings about training are "completely true. The biggest difference with Europe is the commitment to training in big firms." Overall, however, the report paints too bleak a picture: "There are some good things that are going on. Although off-site manufacturing is an answer, it is only one of the answers." But she adds: "It was a very relevant wake-up call, pointing out what we need to do to improve the industry."

Standardisation and Skills: A Transnational Study of Skills, Education and Training for Prefabrication in Housing will be published by the University of Westminster's Business School towards the end of this year.