Tuesday 17 July 2018

Irish firms can build on their UK construction sector success

'A short-term skills shortage forecast for the UK industry can also benefit Irish off-site construction companies.' (stock image)
'A short-term skills shortage forecast for the UK industry can also benefit Irish off-site construction companies.' (stock image)

Donal Byrne

The UK construction sector is proving valuable for Irish exporters, with high-potential opportunities - despite the challenges posed by Brexit.

Global Irish construction services and goods exports were valued at €1.7bn in 2016, while the number of people employed by Enterprise Ireland-supported firms is projected to increase from 33,000 last year to 40,000 by 2020. For the off-site construction sub-sector, the UK receives the vast bulk of Irish exports.

A harsh winter, rainy spring, and the collapse of Carillion in January, with write-downs on bad loans estimated to have exceeded £1bn, (€1.15bn) put a dampener on UK construction activity in the first quarter. Analysts are nonetheless predicting a 'hockey stick' progression for the sector in 2018, similar to 2017.

A seminar, organised by Enterprise Ireland in conjunction with the Irish Precast Concrete Association (IPCA), heard the chief source of optimism is the British government's commitment to a £650bn pipeline of construction projects. While market volatility may well cause a periodic dip in sales for distinct sectors and individual companies, overall demand in the UK remains strong.

Simon Rawlinson, partner and head of strategic research and Insight with Arcadis Design and Consultancy, and a member of the UK's Construction Leadership Council, told the seminar that he sees opportunities for Irish construction industry firms in a range of areas, particularly in energy, waste, transport, telecommunications, social housing and urban regeneration.

The scheme with most potential is the HS2 high-speed rail link, with £55.7bn budgeted for the project.

The British housing market is also buoyant, noted Rawlinson, especially in regions outside London, notably Manchester and the Midlands.

A short-term skills shortage forecast for the UK industry can also benefit Irish off-site construction companies. The UK faces capacity issues due to significant remedial works required nationwide as projects put on hold by the Carillion collapse resume. Brexit will also see many European workers leave the UK.

There are particularly strong opportunities for companies who are skilled in the use of digital design and building information modelling. There is also a new emphasis on optimising long-term product performance, using smart technology and the internet of things. In housing, off-site manufacturing and modular building are growth areas.

Enterprise Ireland supports construction industry exporters in three key ways. We assist companies to improve existing products and to develop new solutions that meet market needs and deliver added value. We run programmes that help to develop a corporate culture of continuous improvement to increase productivity and reduce environmental impact. Other programmes focus on improving and broadening, the capabilities of leadership teams.

We also run Brexit Advisory Clinics for exporters and provide eligible companies with grants of up to €5,000 to help them mitigate risks of potential impacts. Even a soft Brexit could create obstacles. If Britain remains in the European Customs Union, extra paperwork will still be required at UK border crossings. Using a freight forwarding company and a customs brokerage can reduce logistical headaches but it will still require management time.

Because border hold-ups will be more likely post-Brexit, exporters will need to factor in higher costs for delays in estimated delivery times. In the construction industry, where 'just-in-time' delivery is a feature of many supplier contracts, it may be necessary for exporters to invest in UK-based depots to hold goods temporarily before a specified delivery date. One option discussed at the seminar suggested exporters could invest in joint warehousing facilities to reduce the cost burden on individual companies.

Brexit is a new obstacle to trade but not insurmountable. Specialist expertise and high-quality products will always find a market.

Donal Byrne is a senior business development adviser for the construction industry at Enterprise Ireland

Sunday Indo Business

Business Newsletter

Read the leading stories from the world of Business.

Also in Business