UK must establish construction as 'jewel' of post-Brexit exporting

21 August 2018 6 min. read
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As Britain prepares for life outside the EU, the nation’s Government is being primed by multiple sectors to prioritise their area, in a bid to become world leaders and offset the impact of Brexit. The latest of these sees the construction industry, with a call to modernise practices in the sector, which could create an estimated £40 billion export scene.

The spectre of Brexit has repeatedly created concerns around the future viability of the UK as a significant location for firms across all sectors. This debate has often been framed within the context of London, the current financial hub of Europe, losing out on financial sector players, who may relocate to the mainland after Brexit. However, other sectors to have issued warnings on their future include the consulting industry, the architecture scene and the construction sector.

New office space under construction in the UK capital London fell by 9% toward the end of 2017. New builds in London were also 21% fewer than 2016, reflecting an increased developer caution amid continued uncertainty surrounding Brexit. Across the country, ripples of declining activity in the sector hit a number of construction contractors at the turn of the year. Most notably, this saw major outsourcer Carillion go bust in January, following a succession of profit warnings.

Value of the global construction market

Now, a new report has called on the UK Government and business leaders to work to ensure the construction sector is a priority, moving forward, as Britain looks for viable avenues to lessen the economic blow of Brexit. According to the study from British construction consultancy Mace, modernising methods to make the UK a world leader in the $8 trillion global construction industry could create a near £40 billion a year export market for the country.

The dramatic rise in city living presents Britain with a unique opportunity to utilise so called Modern Methods of Construction (MMC), which include off-site manufacturing and advanced digital design. These have been identified by the UK Government as a way to produce well-designed, energy efficient homes at pace with a leaner and high-skilled workforce.

The worldwide construction sector has averaged annual growth of just 1% over the past two decades, almost 2% less than the total growth of all markets. According to Mace’s analysts, this represents the stagnation of using wasteful techniques and business models, and makes the sector ripe for disruption from innovative new approaches represented by MMC.

Globally labour-productivity growth in construction has averaged only...

The continued concentration of populations into urban areas has led to one in six of the homes needed in the UK’s top biggest cities having not been built yet. In order to meet this demand of creating 10,500 new homes every month across Belfast, Birmingham, Bristol, Cardiff, Glasgow, Leeds, Liverpool, London, Manchester, Newcastle, Nottingham and Sheffield in the next 20 years, construction firms will need to improve productivity by 30%, but doing so could unlock £53 billion in economic output at home.

According to the research, meanwhile, the UK is not the only country to experience stagnant productivity performance in its construction industry. For this reason, if the UK can take the lead in the application of MMC then other countries will likely want to follow, tapping UK-based resources in order to do so. The report identified the United States, India and China as the fastest growing markets that Britain should target with MMC methods for rapid growth.

Crown jewels

The paper argues that change is needed before this potential can be unlocked, however. If the construction sector and the Government fail to embrace MMC, researchers fear the UK will be unable to deliver on the number of homes that have been pledged by politicians. With an on-going housing crisis making the property sector in the UK unaffordable for many, homeownership among 25-33 year-olds has halved in the past 20 years, and as a result Britain could be on the verge of a housing market collapse at an incredibly vulnerable economic moment for the nation.

One in six of the homes that these city areas need by 2037 are yet to be built

In order to make sure the UK makes the most of MMC, the report has set out a number of recommendations to reform the sector. These include accelerating planning consent for projects using MMC that can demonstrate faster, sustainable developments than traditional approaches, and using major events such as the Birmingham Commonwealth Games in 2022 to demonstrate Britain’s expertise in MMC.

The Government was also encouraged by the firm to earmark unused or underused urban spaces for pop-up off site construction sites, and to create ‘construction clubs’. In order to create a sustainable talent pool among future generations, these could be placed in schools to teach students the basics of how buildings are designed and built using new technologies such as 3D printing.

Mark Reynolds, Chief Executive of Mace, said, “The construction sector can be a jewel in Britain’s post-Brexit exporting crown. Thanks to a legacy of pioneering achievements, the UK is respected throughout the world as experts in delivering major, complex and innovative construction projects. Embracing modern methods of construction and exporting our knowledge around the world could lead to billions of pounds more in trade and help build new relationships with major markets around the world.”

Related: Mace appointed for construction of University of Sussex's new Life Sciences facility.