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June 2011


June 2011

The construction industry is vital to the UK economy, it provides over three million jobs and almost 10% of the nations GDP. Over the last three years the sector, like others, has been hit very hard. This document spells out the continuing threats to the construction industry going forwards. These are;

Low carbon/ sustainability movement. Rising costs Falling Demand Skilled labour Capital availability

Here at Evepia we intend to do all we can to continue supporting the construction industry.

June 2011

Low Carbon/ Sustainability.

Sustainability is becoming a central concern for all, not just the construction industry. Concern for it has grown out of wider recognition that rising populations and economic development are leading to a progressive degradation of the earths resources. The construction, maintenance and use of buildings impacts substantially on our environment and is currently contributing significantly to irreversible changes in the worlds climate, atmosphere and ecosystem. Buildings are the greatest producers of harmful gases such as CO2, and this trend can only increase, without taking necessary action, with the large population growth predicted to occur by 2050. The construction industry is set to come under the particular scrutiny of government, the consumer and environmentalists. This scrutiny will affect every stage of the construction process, from planning and design to assembly, operation and disposal, and it will affect all members of the industry, from small building firms to large construction companies. An enduring long-term regard for sustainability as a way of business is essential to the future of the construction industry. Disregarding social and environmental issues is not only damaging to the planet, but will ultimately inhibit the healthy progression of business. Construction companies that continue to bury their head in the sand will be doing so at their peril.

Rising Costs
The rising cost of materials is an ever increasing worry for the construction industry, particularly smaller builders. The final quarter of 2010 saw another rise in costs associated with construction. Noble Francis, Economics Director at the Construction Products Association said: The Construction Trade Survey for 2010 Q4 highlights the effect of the poor weather in November and December, which combined with falling demand across the industry and sharp rises in costs during 2010, such as the 46% price increase in copper and 80% in iron ore, are exacerbating problems for the industry

Falling Demand
Demand, measured by the number of new buyers registering with agents, dropped 9.5 percent in January 2011. The drop in demand in January was the biggest since a decline of 11.5 percent in January 2008. Demand had fallen by 26 percent in the six months preceding this, according to Hometrack. In addition to the weakening recovery, confidence among consumers has been dented by inflation, which currently stands high at 4.5%. With Inflation running high, the prospect of a rise in interest rates is a very real one. High interest rates with higher mortgage payments will dampen peoples thoughts of moving house.

Skilled Labour
Whilst labour in general is not short in supply due to heavy redundancy cuts in recent years. The supply of skilled labour to deal with the upcoming changes in the construction environment is in short supply. This is a problem particularly for smaller construction companies that do not have the budget to invest in heavy staff training projects, or to recruit specialist individuals. The answer to this problem may be to use specialist consultancy companies like Evepia that can provide the Individual guidance and support that is at the cutting edge of the industry, but without the commitment and sunk cost.

Capital Availability
A third of small builders have had access to credit restricted as a result of blind prejudice by banks against construction businesses Federation of master builders. At last the Secretary of State is recognising the failings of the banks in respect of lending, and nowhere is it being felt more acutely than in the construction industry. Gordon Banks MP These are worrying statements that sadly are being backed up by the actions of some banks. The major problem has revolved around high rates, high set-up and management costs, which are making some developments unprofitable. No matter your credit history the banks have decided that the construction industry is high risk and firms are having facilities withdrawn and prices raised as a result.