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Irish contractors on the hunt for work in the UK

December 8th, 2010

The Celtic Tiger has roared its last and now stalks the land looking for work and a way to survive. For many in construction this means looking abroad for sustenance – and the UK is its natural prey. So how afraid should we be?

Dysfunctional, disastrous, horrendous, crushing, treacherous. Those are some of the more polite words used to describe the Irish construction market over the past two weeks. Against the backdrop of the most high-profile financial meltdown since Greece, in which the once-mighty Celtic Tiger was forced to accept a €90bn (£75.7bn) bailout from the EU and the IMF, the country’s construction industry is now but a shadow of its former self.

Two years ago, Ireland’s construction output was €38bn. This year it was €11bn. Irish-based economic consultants DKM expect it will fall to €9bn in 2011 – a massive 63% contraction in output between 2007 and 2011. As a result, employment in the industry is expected to fall from 376,000 in 2006 to 110,000 by the end of 2010.

And so the fate of Irish construction companies, from architects – 60% of whom are now unemployed, according to DKM – through to contractors, hangs in the balance. Construction tender prices are down, on average, by 27% since three years ago, according to DKM, and the risk of insolvency is huge: two of the country’s top five contractors, Pierce Contracting and McNamara, went bust this November and experts predict there will have been over 700 construction insolvencies in total in Ireland by the end of 2010. What little work remains is characterised by insanely competitive tenders and a constant risk of the main contractor, or someone further up the supply chain, going bust.

The key question though is what the knock-on effect of this will mean for the future of the already fragile UK market where competition is tough, budgets tight and work so drastically depleted? Here we investigate the effect an Irish surge could have and whether new firms should be embraced as an additional source of talent or feared as a threat to an ever-shrinking pool of work.

“The situation for Irish construction companies is horrific at the moment,” says Michael Stone, managing director of Designer, a €45m turnover Irish M&E firm. “And we predict it’s only going to get worse with more insolvencies to come. We will only work with five or six main contractors now because we’re so concerned about the financial situation of the others.”

“Everyone is in panic mode,” adds Paul McGee, operations director of Irish contractor Bennett Contracting. “We’re seeing kamikaze tactics with firms putting in -15% and -20% tenders just to win work. Losing money before they even start, basically.”

Irish firms with any chance of survival need a strategy – and fast. Most realise they are not likely to prosper by staying put so those that can are decamping. Apart from chasing opportunities in Eastern Europe and the Middle East, firms are looking closer to home and some have already moved, or are making plans to move, to the UK. “There has definitely been an upsurge in Irish firms chasing opportunities in the Middle East and Eastern Europe, but the UK gets the lion’s share of the interest because it’s on the doorstep,” says a spokesman for Enterprise Ireland, the government organisation responsible for developing Irish businesses globally. “The UK has a similar culture and a common language. There are no firm statistics yet on how many Irish companies have moved to the UK in recent months and years but the number is rising and looks likely to continue to do so.”

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