Could we just work our way out of the recession? It is nowhere near that simple, reports Angus Williams.
In most economic crises, the construction industry is the first to stop working.
Banks no longer issue cash. Developers stop snapping up new plots. And builders put down tools.
But despite the economic uncertainty caused by the coronavirus, construction sites never really stopped working.
Whether it’s an extension instead of the usual family vacation, a property developer looking to benefit from a booming property market or opening a new warehouse to keep up with the onslaught of online orders – construction in East Anglia didn’t always go smoothly.
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Craig Western, director of Hadleigh-based architectural firm Wincer Kievenaar, said the office’s workload has grown steadily since the initial lockdown began.
“For our practice in particular, it is mostly residential work,” he says. “Private builders who might want to expand or remodel their own home, and some who want to build their own dream home.
“But the commercial inquiries are also gradually increasing.
“The commercial inquiries were all warehousing. As was to be expected, the focus was less on office space, while people are still somewhat unclear about their future. ”
Mr. Western said resources across the construction industry are depleted.
The most direct impact on his company is the lack of planning officers to oversee applications, he said.
“I certainly don’t want to criticize any of our local authorities – they work hard,” he said. “It’s just a challenge for everyone who has to do with these levels of work.”
But others feel the pinch elsewhere.
Adam Overton, director of Heydon-based construction company Overton, said, “I think the biggest impact is the price increases we are facing.
“Ordinarily we would have paid 5-6 pounds per bag of plaster of paris. Now we’re up to £ 9 a bag.
“We used to hold our material prices for 30 days, if not longer. They only hold them for 24 hours now.
“That’s a massive, massive impact.”
Saul Humphrey, chairman of New Anglia LEP’s Building Growth business and real estate advisor in Norwich, says these price increases were due to global supply shortages.
He said: “These are global bottlenecks in many cases and certainly national.
“For steel, it’s gone from 600 to 700 pounds per ton to over 1,000 pounds. It’s an increase of 30-40% or even 50% depending on the actual product type.
“These increases make it very difficult to offer a customer a fixed price and keep it that way. The stated fixed prices make it very difficult to keep this promise.
“Suppliers, sub-contractors, contractors are all really fighting these increased costs and looking for alternative solutions or some kind of relief from the pressures they are under because they are all very unusual.”
James Potter, managing director of Ipswich-based building construction company Superstructures, said that in his view it was difficult to change constructions to avoid material shortages and price increases.
“Redesigning this material shortage is actually very difficult,” he said. “And that takes a long time. It’s a bit like turning an oil tanker over. ”
Instead, he said, the solution is to manage customer expectations to mitigate delivery issues.
He explained, “It’s about planning ahead.
“I know some of the big builders talk to their clients and say, ‘We are programmed to start this big project in three months. You need to be aware that your material price could be 20% higher and your lead time for all of these materials could be twice as long. ‘
“If we as an industry have realistic schedules and can meet customer expectations, we could postpone this boom for a longer period of time.”
Bruce Lyons, an economics professor at UEA, said this building boom could actually cause problems for the economy as bottlenecks build up elsewhere.
He said, “The traditional Keynesian view would be that there is always some excess on the supply side. So if you increase the demand, you increase the jobs and you get into a positive cycle.
“But Keynes wrote in the position of massive unemployment and inflation was not an issue.
“Now our conditions on the supply side are different. If you reduce the supply and increase the demand, you will not get so much more output because of the bottlenecks in the economy, but rather higher prices. “
And any increased incentive for the construction industry could lead to problems elsewhere.
“In these conditions, you are unlikely to cause problems elsewhere as people fight for truck drivers and people fight for hospitality and it could get very tight,” he said.
According to the Construction Instruction Training Body, an additional 17,000 construction workers will be needed in the east of England to keep up with the boom.
And that even before possible major projects such as Sizewell C.
Mr. Humphrey said, “We have an aging workforce. In construction, the average worker is older than in many other sectors.
“There are serious systemic problems related to construction and the labor force that may have been exacerbated by Brexit uncertainty and dependence on European labor.
“But it is certainly a perception that we no longer have quite the capacities that we had before. “We have to think differently about building.
“We have to think about modern construction methods.
“I think with the shifts in labor and material availability, this is the catalyst for change.
“Build better” is not only driven by the pursuit of increasing efficiency and reducing CO2, but also by the difficult availability of materials and labor.
“We are at a point of a real paradigm shift.”