Sector spotlight: construction

Fact…

• The construction industry in the South West is predicted to create 6,480 new jobs a year, according to research by the Construction Skills Network
• According to the Construction Industry Training Board (CITB), the construction industry is facing a national slowdown in the aftermath of the Brexit vote, with expected output nationally over the next five years revised down from 2.5 per cent to 2 per cent
• 399 new construction companies started trading in Bristol in 2016 
• The South West is the UK’s hottest region for industrial construction, according to the latest research by Barbour ABI’s Economic and Construction Market Review 2017, up 7.6 per cent from 2015

Construction professionals in the city are optimistic about prospects in 2017, according to a report by accountancy and investment group Smith & Williamson. An annual survey of senior executives found the greatest confidence in the residential arena, with almost three-quarters seeing housing as a compelling five year investment, although commercial prospects are also buoyant with major infrastructure projects such as the ongoing Metrobus, Bristol Arena and Hinkley Point power station. 

“Bristol has the second fastest growing economy outside of London and people are increasingly drawn to the city as well as the South West’s many other thriving commercial centres and beautiful countryside,” explains Paul Bray, partner in the firm’s property and construction team. “This further strengthens demand for cost-effective housing with the availability and price of building land providing added incentives to developers, particularly when compared to London and the South East.

“One possible threat to the housing market in Bristol and South Gloucestershire comes from South Wales where estate agents say the majority of recent house buyers in Chepstow and other parts of Monmouthshire are coming from the greater Bristol area, motivated in part by the prospect of lower commuting charges thanks to the halving of the Severn Bridge tolls in 2018. There are already new housing developments underway in these areas in anticipation of this growing demand.”

LARGE FIRMS

National construction firm Willmott Dixon’s regional hub, covering Bristol, Cardiff and Exeter, is based in Pill and turned over £135m last year, projecting £160m in the year ahead. “We’ve done lots of education and public sector work in the past,” says regional director John Boughton, with projects such as the Bristol University Queens Building, which is to host the new engineering department, Kingswood Fire Station and UWE’s Bower Ashton art studios. “Now we’re looking to diversify into other sectors.”

This year some of its biggest Bristol projects are the £19m Aurora office block at Temple Quay and the residential blocks at Finzel’s Reach as development in Redcliffe continues apace. “If you look at what’s planned for Bristol – the arena, universities seem buoyant, the commercial sector – there seems to be a level of investment in the city,” John observes, adding that there’s no shortage of opportunity. “For us one of the biggest challenges is not wanting to over-trade. We want a sustainable level of business.” 

Rydon has a robust branch in the South West, centred on Bristol. “This year we had a £50 million turnover in the South West,” says regional director Paul Barber, “but most of it was in and around 20 miles of Bristol.”

Employing around 60 people in the Bristol office, the company runs six to seven sites at any one time, with recent landmark projects including a £6m new performing arts centre for Bristol Grammar School, a £10m new care home in Weston-super-Mare and the £2m visitor centre at Clifton Suspension Bridge.

“The vibrant sector at the moment is the education sector,” says Paul, whose company, specialising in blue chip commercial projects, is working on a new teaching block at the Red Maids’ School. In 2017, he says Rydon is “not looking to grow significantly”, having grown by 100 per cent in the last three years, but to “consolidate” and to enlarge the company’s residential portfolio.

Derek Quinn is executive director of Midas Construction, part of the Midas Group, which has been in operation for 40 years and had a collective turnover of £133 million in 2016. “We’re very upbeat for 2017,” he says, pointing to a diverse portfolio. “The market in the Bristol area is very buoyant, which is clear from the property investment activity throughout the region in all sectors, be it commercial property, logistics, care, student accommodation, hotel and residential. 

“We have a very strong forward secured order book and we are collaborating with our clients on some exciting pre-construction activities for projects starting throughout the year.”

BAM Construction’s 164 regional staff are based in Bristol where it turns over £115m from projects such as Imperial Tobacco’s headquarters in Ashton, Axa’s offices on Blackboy Hill and UWE’s Enterprise Zone and Students Union in Frenchay.

Addressing the talent crisis is a question of upselling the industry’s benefits, says regional director Tim Chell: “getting educators and students to realise that the construction industry is as innovative and interesting as the aircraft and automotive sectors, and use just as much technology.”

MEDIUM-SIZED COMPANIES

Beard Construction turns over £15m of its £135m national turnover in Bristol, employing 26 people direct. Its projects range from £2m to £10m in value, including the new Brunel museum at the ss Great Britain and a refurbishment at the John Wesley Chapel.

“We’re strengthening our presence in the city with a move to more central offices in Clifton in September,” says construction director Mike Hedges. “There are a lot of construction and refurbishment projects coming up in Bristol in the £2 million-£7 million range but a shortage of quality mid-sized contractors to deliver them. We see this gap in the market as a major opportunity for Beard which has wide-ranging project expertise.”

IKON, founded by Pete Hargreaves and Steve Chant in 2001, has grown steadily over the last 15 years and now employs 50 people from its Clifton office with a further 200 on site around the region. It was contracted to redevelop the Clifton Lido, as well as new residential developments in Portishead and Clevedon.

Helm Construction turns over £12m annually and employs 50 staff. Based in Bristol, they work on projects across the region, from the regeneration of Bedminster’s St. Luke’s Hall to a new £2.5m retirement project in Minchinhampton, Gloucestershire.

Adam Marks, Helm’s head of finance, says the sector is looking strong for 2017: ““We are seeing an increase in both residential and commercial projects across the Greater Bristol area – despite gloomy national predictions that the sector was grinding to a halt.” The company reports a 30 per cent year-on-year increase on orders, including new build, residential, commercial and domestic projects.

CEO Gary Sheppard says the biggest challenges for the year ahead are “finding enough skilled workers on the back of chronic labour shortages, an increase in material costs, plus a weak pound versus the dollar impacting on cost base”. IKON echo sector-wide concerns about the availability of skilled workers, and call for a new skills strategy and more apprenticeships to tackle the gap.

Gary is also critical of Bristol’s transport and the impact that it has on the local economy: “It’s bad for business and costs businesses millions of pounds each year. Resident parking still remains a big issue – it also causes problems for businesses like Helm making it difficult to build in restricted areas.”

John Perkins Construction has doubled its turnover in three years, reaching £9 million last financial year, with the next year’s projected turnover to tip over £10 million. Recent large-scale projects have included a £2m renovation of the Harbourside’s Underfall Yard and a £1.4m contract to transform the top floors of the Arnolfini.

Contracts director Rupert Perkins is among the many voices in the sector viewing the Hinkley Point C nuclear plant set for construction in Somerset with trepidation. “Undoubtedly, the massive 10-year project at Hinkley Point provides potential for risk and opportunity. The risk is that it may soak up the already scarce skilled workforce. The opportunity is for many spin-off projects, as investment flows into an underdeveloped part of Somerset.”

Those fears feed into a wider problem in the construction sector, that of a skills shortage. “There is a major skills gap,” says Rupert. “This is a challenge but it also provides an opportunity for young people to train in both on-site trades and management positions. Young people have a real opportunity to join the much-changed and modernised construction industry.”

There are countless other small and medium firms across the city that are continuing to flourish in the current economic climate, including family-run Spiller Builders, Symes Construction, and Green Heart, champions of sustainable and passive construction. Newgate Construction, based in Whitchurch, was founded in 1998 by Mike Newcombe and has grown its turnover from £500,000 in year one to £4.5 million today.

Innovators such as Kubla, based in the Engine Shed, are pushing the sector’s technology agenda with software that digitally models earthworks projects to improve accuracy. “We have plans to move into 3D printing and machine control technology which are the next big thing in the sector,” says director Ted Woods. 

Main image – Gary Sheppard of Helm Construction 

Read more:  Construction begins on new business park