These include the £110m final phase of the Eden Project, which includes the dry tropics biome and an education centre, the £500m Broadmead shopping centre redevelopment in Bristol, the £100m residential development at Carlyon Bay, Cornwall, and the £170m Drakes Circus shopping centre redevelopment in Plymouth. Cost consultant Davis Langdon & Everest has more than £500m work in Cornwall alone.
There is so much work here that many construction professionals in the region are concerned that the market could overheat. "The amount of work people are talking about down here could easily make it a hotspot," says David Porter, a partner at DL&E and the man responsible for the Carlyon Bay scheme.
The trend was highlighted in May's tender price forecast, produced by DL&E and published in Building. The forecast said: "The increase in workload has put pressure on the local building industry; two-thirds of building firms in the region are working at full capacity and skills shortages have forced labour rates for traditional trades up 10-20% over the past year."
Construction output was up a staggering 24% last year and value of new orders rose to 26%. And with commercial activity accounting for 22% of new orders in the South-west compared with 31% nationally, the impact of a slowdown in the commercial sector is being felt much less here than in many other regions.
Several factors have contributed to the surge in activity. Gareth Steventon, the partner in charge of DL&E's Plymouth office, says that one of the main reasons is that "Devon and Cornwall are playing catch-up with the rest of the country – that is why there are so many town-centre redevelopments under way".
Another reason is the amount of European funding being pumped into the area. Cornwall and the Isles of Scilly are, aside from parts of Wales, the only UK regions to receive objective one funding, the aim of which is to revive areas where the collapse of traditional industries has caused serious economic and social problems. The funding is worth about £800m to the area when public–private match funding is added.
And it is not just Cornwall that is benefiting from European money. Areas of Devon, Somerset and Bristol are in receipt of objective two cash, sourced from the European Regional Development Fund and the European Social Fund for areas with particular structural problems. This is available until 2006, which should keep things ticking over nicely over the next few years.
Steventon adds that a contributing factor is the roaring success of the area as a holiday destination. "The tourist industry has grown-up in the area, with schemes like the Eden Project working so well that they have created their own mini-boom," he says.
This boom has been further fuelled by public sector work including the construction of the £100m main campus building and student accommodation for the Combined Universities in Cornwall, near Falmouth. At the same time, the South West Regional Development Agency is pump-priming the redevelopment of a series of Ministry of Defence sites in the area, including the Royal William Yard and Seaton Barracks sites in Plymouth.
The regeneration of rundown urban areas is also under way. "There are two existing urban regeneration companies – one in Swindon, one in Redruth, Cornwall – and we are applying to set up a third heritage urban regeneration company in Gloucester for the historic town centre and Gloucester docks," says John Taynton, of the SWRDA.
With the region's economy on the up, the housing market is undergoing a renaissance "because people now want to live here", explains DL&E's Steventon.
One reason people want to live in the region is the proximity to the sea and the South-west's extensive coastline. However, the region's peninsular location is also a curse, inhibiting the supply of labour and materials to the area, which many see as a major contributing factor in the market overheating. "In most other areas of the country you can call on a supply chain from a 360° area. However, in Devon and Cornwall the supply chain can only come from a 90° area – since the rest of the surroundings are water – and therein lies your problem," says Steventon.
Terry Langdon of cost consultant Gleeds agrees with Steventon. "Working in the extreme South-west is similar to working on the island of Guernsey – it is a small market serviced by local people; for a project of any size you need to ship people in and it is a long, long way from a major centre where there is a construction workforce," he explains.
This parochialism has led to concerns that there could be problems finding a contractor willing to work on larger projects in the region. "There are projects in the pipeline in places like Exeter and Plymouth, but once the workforce is saturated you've got a problem," says Langdon. "We are project managers for St Austell town-centre redevelopment [in Cornwall] and we are concerned about whether we are going to be able to get together a tender list."
The reason why there are so few indigenous contractors is that there has been so little work for them to do. As a result, the supply chains for workers and materials are not established. It is situation that the regional development agency is endeavouring to resolve. "There is a huge shortage of skilled construction workers in the South-west," the SWRDA's Taynton admits. However, he says that the agency is attempting to resolve the situation by investing in training within the region. "In Cornwall we are using objective one funding on a project called Constructive Cornwall, which runs in conjunction with the CITB, to train construction apprentices," he says.
With the demand for labour and subcontractors hotting up as more and more projects start on site, it is the regional contractors, with their long-established supply chains that have seized the initiative. "There is a change happening, the old guard are now falling away and a new wave of contractors are rising to the fore, some moving down from Bristol and some are growing organically," says DL&E's Steventon.
Local contractors agree that the market is changing.
"It used to be that larger companies leaped down here from London, but now clients favour those already on the ground because they know the local supply chain," says Steve Hindley, group chief executive of Devon-based contractor Midas Construction. Because Midas has an established supply chain of local specialist contractors, Hindley plays down fears that the construction market could overheat.
Nick Higgs, group chief executive of Bristol-based contractor Cowlin Construction agrees with Hindley about the change to the market: "We've seen some of the larger contractors move out of the area including Laing and Carillion," he explains. However, Cowlin says that competition for work is still "fierce", but he says his company now has to compete "with the true local boys such as Pearce, Mowlem and Kier for work".
Things are likely to become much more competitive as new roads improve access to the peninsular. "Infrastructure is a problem," admits the SWRDA's Taynton. "We have been, and we still are, lobbying hard for another strategic route from London to the South-west," he says. However, the situation will improve in 2007 when improvements to the A30 are due for completion. But until then, it is the local contractors that look set to capitalise on the construction boom.
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