With sixty thousand jobs lost, and a 9% fall in output, 2012 saw UK construction tip back deep into recession. Over the past five years the construction industry has gone through one of its most difficult periods since the Second World War and the prospects are for 10 more years of pain.

The Construction Skills Network report – the industry’s annual skills forecast prepared by CITB-ConstructionSkills with input from employers across the UK, paints a stark picture of 2012:

20% downturn in public sector housing and non-housing construction
5% downturn in private housing construction
10% per cent downturn in commercial sector construction
15% downturn in infrastructure construction

And the prospects for the next 5 years (2013 – 17) are equally discouraging. Nearly every sector of the industry will continue to struggle with only the private housing, repair and maintenance and industrial sectors predicted to achieve anything like consistent growth. As a whole, the industry will only grow at an average of 0.8%, and will not match its 2007 output peak until 2022.

This weakness in performance is reflected in a predicted fall in construction employment every year from 2013-16, reaching a low of 2.36m – the lowest employment level in the industry since 2000.

Recruitment to the industry is predicted to run at an average of 29,050 a year from now until 2017 – largely to fill vacancies arising from those leaving the sector. Across the UK only Greater London and the East of England can expect to see employment actively grow in this period.

Whilst Wales, Greater London and the North East are predicted to show the greatest increase in output during 2013-17, the North East is recovering from sharp declines in previous years, and much of the growth in Wales is linked to the Wylfa nuclear power build.

In contrast, the construction industry in the North West, the Midlands and Yorkshire and Humberside is expected to shrink still further.

Underemployment is an increasing concern with three regions (Northern Ireland, the North West and Yorkshire & Humberside) showing a gap of over 15% between falls in output and falls in employment over the last five years – suggesting an unsustainable level of capacity in the system.

Judy Lowe, Deputy Chairman of CITB-ConstructionSkills, said: “Construction found itself at the heart of a ‘perfect storm’ in 2012 – hit hard by a combination of public sector spending cuts and a lack of investment in the private sector. Client and consumer confidence is low and it is keeping growth levels down.

“Worryingly, the outlook doesn’t look much better – by 2017, construction output will still be 12% down on its 2007 peak, and employment 17% down on its peak in 2008. Indeed, we don’t anticipate the industry returning to its former levels until at least 2022 – meaning this will be one of the most difficult periods for construction on record.

“Construction is a vital engine of UK growth. While construction struggles for its survival, it’s impossible to see how the UK economy can generate significant growth.”

“What’s bad for construction is bad for the economy, so doing nothing is not an option. There is too much at stake. Construction remains the only industry that can kick start the economy in the short, medium and long term. We know that, for every £1 invested in construction, £2.84 is generated for the wider economy. There are currently over 150,000 unemployed construction workers. This potentially costs the economy £2.1bn a year in unemployment benefit and lost tax revenue. The actions we are proposing are straightforward, easy to implement and will deliver the results that re-establish construction as an essential element of economic growth.”

Tackling the growth challenge head-on, over 1,400 construction bodies and employers have joined forces in the CITB-ConstructionSkills inspired Construction4Growth campaign. Tomorrow, a deputation from the campaign will meet Ministers at an 11 Downing Street Summit, where a 10 point plan for working with Government to secure growth and support the industry will be discussed.

The plan examines:

Ways to get projects delivered as part of the Government’s pledged capital investment in construction

Investment in shovel-ready repair and maintenance projects to get unemployed construction workers back on site

A mandatory requirement for teachers to undertake taster courses to understand the value of a vocational career

The results from the 2011/12 accident survey carried out by the National Specialist Contractor’s Council
(NSCC) show that the NSCC fatality rate has fallen by 50%, the major injury rate by 43% and the over 3-
day rate by 60% since NSCC started collecting accident information nine years ago.

Last year, the NSCC fatal injury rate was 1.8 per 100,000 workers compared with the industry rate of 2.3
per 100,000 workers as reported by the Health and Safety Executive (HSE). The NSCC major injury rate
was 204.1 per 100,000 workers and the over 3-day injury rate was 496.0 per 100,000 workers, which fell by 22% from 2010/11.

Almost half of all accidents occurring to NSCC Specialist Contractors resulted from either handling, lifting
and carrying or slip and trips, which is consistent with all industries in the UK, including construction.

All NSCC member organisations provided information as part of the latest annual survey, which included
more than 2,300 businesses, demonstrating the continued importance placed by the specialist sector on
benchmarking and improving health and safety in the workplace. The size of the workforce covered by
the survey increased to over 112,000 operatives compared to 98,000 in 2010/11, which indicates that
employment levels within the specialist sector have stabilised.

NSCC Chief Executive Suzannah Nichol MBE said:  “Construction is a high risk industry but the success of the Olympic Delivery Authority in delivering the Olympic Park with no fatalities and a below average accident rate proves that, if we make health and safety on site a priority, we can successfully reduce the number of accidents that occur. By collating accident information from the specialist sector, NSCC is able to identify trends and tailor the guidance and support available to members to reduce the risk of similar accidents recurring in the future.”

From 6 April 2012, the HSE extended the period before an injury needs to be reported under RIDDOR
from over three days to over seven days and the NSCC accident survey for 2012/13 will be updated
accordingly.

Construction Minister Michael Fallon has announced a team of top industry figures who will work with Government on the Industrial Strategy for construction.

The eighteen strong advisory council has been put together by Government Chief Construction Adviser Peter Hansford who is leading the formation of the strategy and will chair the group.

Representing the breadth of the industry the Construction Industrial Strategy Advisory Council (CISAC) will oversee and steer the development of the strategy.

Construction Minister Michael Fallon said:

“Industrial strategy is about setting out a long term Government approach to how we support business. This will give confidence now for investment and growth.

“Construction is a sector where Government and business working together can have a real impact. It can drive productivity and growth in other parts of the economy.

“We are very clear that in order for it to deliver, the construction industrial strategy must be developed in true partnership with industry. This advisory council will be an important part of that.”

Chief Construction Adviser Peter Hansford said:

“I’m delighted that these key figures from across the construction industry have agreed to join our new Advisory Council. I look forward to working with them over the next six months to create a long-term strategy for our industry and to chart the way forward for construction in the UK.”

The members of CISAC are:

• Peter Hansford (Chair) – Chief Construction Adviser, UK Government
• Denise Bower – Professor in Engineering Project Management, University of Leeds
• Mark Clare – Group Chief Executive, Barratt Developments
• Geoff Cooper – Chief Executive, Travis Perkins
• Keith Howells – Chairman, Mott MacDonald
• Chris Kane – Director, Greendale Construction
• Simon Kirby – Managing Director, Infrastructure Projects Network Rail
• Kevin Louch – Managing Director, Stanford Industrial Concrete Flooring
• Robert Mair – Professor and Head of Civil and Environmental Engineering, University of Cambridge
• Chris Newsome – Director of Asset Management, Anglian Water
• Ray O’Rourke – Chief Executive and Chairman, Laing O’Rourke
• David Pinder – Chief Executive, BDR Thermea
• Neil Sachdev – Property Director, Sainsbury’s
• Paul Sheffield – Chief Executive, Kier Group
• James Stewart – Chairman of Global Infrastructure, KPMG
• Jack Pringle – Principal, Managing Director, Pringle Brandon Perkins + Will
• Mike Putnam – CEO and President, Skanska UK
• Mark Wakeford – Managing Director, Stepnell

The issues the strategy is expected to cover include growth and innovation; supply chain; SME engagement; skills; access to finance and overseas trade. It will build on, but not duplicate, the work of the Green Construction Board, the Infrastructure UK Cost Review, and the Government Construction Board.

The industrial strategy for construction will be launched in the summer.

Superglass , a leading manufacturer of glass mineral fibre insulation products,  has reported that sales volumes have been steady, despite challenging market conditions, but that it has concerns about Green Deal.

In a trading statement the company said that it remained cautious about the Green Deal channel and continued to work on broadening its routes to market.  Superglass said: “There remains a lack of clarity on the transitional arrangements from CERT, which ceased on 31 December 2012 to the Green Deal which comes into full effect on 28 January 2013.  As a result, volumes in this channel are likely to reduce with a potentially slow start-up of the successor Green Deal scheme.”

The company welcomed the the Department of Energy & Climate Change’s Green Deal communications campaign.

Input cost pressures persist with energy costs continuing to rise during the period and the Board remains focused and is making good progress in meeting its strategic objectives of migrating Superglass into a lower cost, higher quality producer of glass fibre insulation solutions with an emphasis on selling its products through broader routes to market, an enlarged customer base and a more comprehensive range.

Construction output is forecast to fall by more than 2% this year, according to the latest forecasts published today by the Construction Products Association.  These figures come on top of the sharp decline experienced in 2012, when the industry contracted by nearly 9% and indicate that recovery in the sector is still twelve months away.

Adding to the gloomy picture, figures released on Friday by the ONS for construction output in November, show there was a 3.4% decline month on month and a 9.8% decline from the same period a year ago, with the industry having lost £8 billion of work in the past twelve months.

Commenting on these forecasts, Noble Francis, Economics Director of the Construction Products Association, said: ‘Public sector construction work continues to bear the brunt of the government’s austerity drive and has fallen by 15% over the last two years. Our Forecasts show that it is expected to continue to fall by a further 7% this year.   Unfortunately, growth from the private sector, which government hoped would compensate for this decline in public sector activity, has not materialised and it too continues to contract.

‘With new orders for construction falling significantly at the end of last year, 2013 is going to be a difficult year for the construction industry with output forecast to fall 2.2%.  As the construction industry accounts for nearly 9% of GDP this contraction will be a major constraint on growth in the wider economy over the year ahead.

‘However, despite these forecasts, there are some sectors of construction where growth is anticipated. Private house building is expected to grow 6% in 2013 boosted by the Bank of England’s Funding for Lending Scheme and infrastructure investment, identified by government as essential for the recovery, is set to grow throughout the forecast period, due partly to Crossrail, the largest construction project in Europe, as well as the critical investment in energy that is long overdue.

‘Investment earmarked by the Chancellor in his autumn statement for road maintenance should provide some much needed activity across all regions of the UK, but it is important that this work is started immediately and used as a springboard for other economic activity if it is to have the desired impact.’

Key points in the Forecasts include:

• Housing starts in 2013 forecast to be 122,000, which is fewer than half that needed to meet the number of new households
• Activity in the commercial sector, the largest sector of construction, to fall 5.7% in 2013
• Retail construction output to fall 10% in 2013
•  Output in education construction to fall 9.8% in 2013
• Health construction output to fall 8.7% in 2013
• Roads construction output to rise 8% in 2013 following 45% fall in 2012

Reports on a USA legal news website says that a USA drywall company has filed a class action antitrust lawsuit against nine major drywall manufacturers accusing them of conspiring to fix and raise the prices for gypsum board. The defendants collectively control 99 percent of the gypsum board sold in the United States and Canada, according to the class action lawsuit.

Sierra Drywall Systems Inc. alleges in the drywall price-fixing class action lawsuit that Georgia-Pacific LLC, American Gypsum Company LLC and seven other defendants forced consumers to pay inflated drywall prices starting in January 2012 with a large, coordinated price hike. The price-hike also
included new restrictions on the supply of gypsum board made available to distributors.

“Faced with a weak market with no immediate prospect of rebound, the defendants nevertheless announced a large spike in the price of gypsum board. This increase was not supported by competitive conditions and thus could not have been sustained absent the defendants’ agreement to raise prices,” the drywall antitrust class action lawsuit states.

Sierra Drywall says the defendants are planning a second substantial price hike for 2013.

The class action lawsuit goes on to say that the defendants abruptly stopped using a common practice called “job quotes” that allowed customers to lock in a price for gypsum board for the duration of a construction project. According to Sierra, eliminating job quotes facilitated the alleged collusion by making pricing more consistent and making it easier for the companies to detect anyone who deviated from the conspiracy.

Sierra further alleges that significant barriers for entry into the gypsum board market have aided the alleged drywall conspiracy by keeping out new competitors that could undermine their price-fixing.

The class action lawsuit points out that drywall price fixing is nothing new. In the 1970s, six gypsum makers were convicted of criminal antitrust violations, and in 2002 the European Union fined four gypsum companies $455 million for fixing the prices of drywall in the 1990s.

The drywall price-fixing class action lawsuit is seeking treble damages for a proposed class of all direct purchasers who bought gypsum board since January 1, 2012.