Team of bankers and investors to advise on how industry can encourage a more positive response.
A taskforce of bankers and investors is to advise the construction industry on how to improve its image in the City.

The group is the brainchild of Tony Jackson, chairman of the Construction Industry Board, who fears that the sector is seen as financially untrustworthy and unreliable. It will be headed by Mike Newens, managing director of group property at NatWest.

Newens is contacting City figures who invest in construction companies and will report back in June. ING Barings, Deutsche Morgan Grenfell, BT.Alex Brown and UBS Phillips & Drew are among the firms he may contact.

Newens said: "This will be a one-off look at how the City views the construction world and what it will take to improve it. Most contractors and housebuilders are not being seen as favourably as bigger firms from other sectors, and their market capitalisations are lower than they should be.

"Construction industry firms are not seen as easy to analyse and I am talking to a number of analysts to try to get them involved. I want advice from any person involved in advising and undertaking corporate investment.

"Investors require confidence and transparency from companies they buy into, and I'm not sure they always get that from construction.

"Compared with the manufacturing and retail sectors, it is not as easy to work out what's going on," said Newens, although he agreed that materials producers could be assessed easily. He said that, despite their image, construction firms had assets that the City was underestimating.

Contractors, for example, required little capital to make a profit because they spend clients' money rather than their own.

But CIB chief executive Don Ward said that, although this might be a bonus, he wanted to see construction companies investing more in research and training.

The CIB decided to create the taskforce after receiving a DETR report revealing that construction had made better productivity gains than industry as a whole since 1984. The advisory group now aims to put this message across.

The CIB fears that both major contractors and smaller firms are tarnished by construction's poor image in the financial world.

Smaller contractors may suffer because bank managers refuse to extend their overdrafts. Major contractors struggle with poorly performing shares, which damage clients' confidence in them.

But Wimpey chairman Joe Dwyer, who the CIB had hoped to consult on the issue, described the taskforce as "an exercise in wasting time".

"Construction companies are not rated in the City because they have not been performing well."