In today’s news, a while we look at the number of project launches drops by a third, London defies the trend. In the meantime, construction companies in the United Kingdom are providing young people and those who are contemplating a change in their career with an exclusive opportunity to learn about the industry of construction during Open Doors 2024. In addition, the construction of the Sizewell C nuclear reactor in the United Kingdom has moved one step closer to completion. On top of that, Montego Homes enters into administration simultaneously with the suspension of construction projects by a Victorian construction company. Apart from that, in regard to the problem in the Red Sea, how concerned should construction truly be? As Houthi rebels continue to block ships, professionals from the business examine the impact that this will have on the supply chain.
Project Starts Drop by Third, but London Defies it.
Original Source: Project starts fall by third but London bucks the trend
The value of UK project starts declined by over a third in Q4 2023, but grew by 29% in London.
In its quarterly Construction Review, construction analyst Glenigan discovered UK project starts ‘plummeted’ by 31% in October, November, and December 2023 compared to 2022.
The figure fell 19% from the previous three months.
Main contract wins dropped 34% in 2022 and 11% in the third quarter of 2023.
London defied the national trend, with project starts rising 29% in the fourth quarter of 2023 compared to the third quarter, after declining 11% in 2022.
Private housing project starts rose 19% in the final three months of the year compared to the three prior months (but still down 9% from 2022).
Glenigan’s economic director Allan Wilen called the surge in private home projects a ‘positive sign’ that ‘developers’ hopes for the housing market in 2024 may be on the up’.
He blamed ‘persistent, external economic challenges which are pulling the industry down’ for dismal building performance in late 2023.
‘High interest rates, decreased company investment, and the projected Christmas slowdown led to pauses and delays in project launches as we came to the end of 2023’.
He linked a drop in primary contract awards and planning approvals to the UK’s economic crisis and “febrile political environment less than a year away from a general election.”
Separate ONS figures showed UK construction work value fell to a six-month low in November 2023.
According to our sister title Construction News, sector work declined 0.2% from October and 0.6% from September to £15.6 billion.
Based on anecdotes, the Construction Leadership Council blamed ‘adverse weather, particularly heavy rains and strong gusts, [which] led to delays in scheduled work’ for the November drop.
Industry analyst Barbour ABI reported that UK construction spending fell by £11.1 billion to £69.2 billion in 2023, a 14% down from the record £80.4 billion in 2022.
Seek Construction Jobs with Open Doors 2024
Original Source: Discover Careers in Construction with Open Doors 2024
UK construction companies are offering young people and those considering a career shift an exclusive opportunity to discover the business during Open Doors 2024, from Monday, March 18th to Saturday, March 23rd.
Build UK’s Open Doors provides a unique behind-the-scenes view at construction sites and workplaces, revealing the industry’s many job prospects.
Over 150 events in England, Scotland, and Wales allow visitors to experience the business. Visit major projects including One Leadenhall in London, the new Aquatics Centre in Manchester, and the Paisley Museum in Scotland to see the construction industry in action and learn about its 180 careers.
Construction needs almost 45,000 new hires annually. Open Doors attempts to show that the business provides fascinating and lucrative careers for all ages, backgrounds, and skills.
Schools and colleges should organize group visits for students to learn about the sector and its many apprenticeships.
Build UK Chair Julie White said, “I am passionate about making the world of construction open and accessible to as many young people as possible, so they can see all the different career opportunities there are in our industry. Book your visit to Open Doors today to learn about the great things we build and what the industry has to offer and where a career in construction could take you.”
“Open Doors definitely sparked my interest in a career in the construction industry,” said Willmott Dixon Management Trainee Quantity Surveyor Michael Oppong, who attended an Open Doors visit in 2015. I now combine on-the-job training with university study in a degree-level apprenticeship. I recommend everyone attend an Open Doors visit and explore a career in the field, like me!”
New 300 x 250 AdLayher: listen, respond, succeed
The Open Doors website will continue to add activities in the coming weeks, so individuals and educational institutions should check back to find local events.
Build UK hosts Open Doors, a week-long event that lets visitors visit construction sites and businesses around Britain and learn about construction jobs. Visit the Open Doors website to book.
Build UK, the leading UK construction industry representative organization, brings together clients, main contractors, trade associations representing specialist contractors, and other industry collaborators to promote construction’s value and drive positive change.
The UK Nuclear Reactor Project Sizewell C is Nearing Completion
After a Development Consent Order (DCO) was issued, Suffolk’s two-unit Sizewell C nuclear power station project is moving forward.
The two France-supplied EPR units were approved for construction in July 2022, allowing preparations to commence.
The government also required crucial road surveys and governance groups before building the plant. Sizewell C said these commitments were fulfilled.
A DCO is a request for permission to build a “nationally significant infrastructure project,” including power plants.
Before construction begins, the government must raise £20bn (€23bn, $25bn) from outside investors through debt and equity, with a surcharge on energy bills to cover the cost.
To recruit private investors, the government, Sizewell C, and EDF announced an equity raising last September.
Nuclear minister Andrew Bowie called the DCO trigger “a major milestone for Sizewell C and our ambition to deliver up to 24GW of low-carbon nuclear power by 2050”.
Sizewell C joint managing directors Julia Pyke and Nigel Cann said: “This is a big step for our Suffolk project and British energy security.
“We’ve had a successful year of pre-commencement works on site, and we’ve been working hard with local partners and organizations to prepare for this next step for the project.”
Last week, the UK government announced plans to build 11 additional reactors by 2050, enough to cover 25% of national electricity demand, in its biggest nuclear power development in 70 years.
Ministers released a blueprint committing the government to building 24 GW of nuclear reactors by 2050, up from 5.8 GW now.
From 2030 until 2044, one or two new reactors will be approved every five years and another large-scale nuclear station will be supported, along with Hinkley Point C and Sizewell C.
Montego Homes Goes Bankrupt as Victorian Builder Halts Projects
Another construction company went into voluntary administration, halting all projects.
Montego Homes in Victoria named Cor Cordis administrator on Monday.
We’ve started an urgent investigation of Montego Homes’ financial status and are urgently seeking a buyer to restructure or recapitalize the company,’ administrators stated.
The house-and-land package builder has 18 projects on hold.
Eleven staff were laid off and 90 customers affected.
Several clients reported being unable to reach the builder.
The Victorian Managed Insurance Authority has given the firm 78 domestic building insurance coverage since 2021.
According to Master Builders Victoria CEO Michaela Lihou, it was the latest company to collapse due to inflation, borrowing rates, and supply and demand.
Surfers Paradise-based W3D Constructions Pty Ltd, owned by Ross Wolbers, went bankrupt on December 7.
Mr. Wolbers’ company owes $1.2 million, and the collapse would delay building at his former school, The Southport School (TSS).
According to liquidator Matthew Bookless of SV Partners, W3D Constructions owes roughly 50 creditors $1.278 million, including $275,000 to NAB, the Courier Mail said.
Albert Wolbers’ wife Louise is the daughter of Queensland’s richest property developer Norm Rix.
Aluminium and Fabrication, due roughly $208,000, and the Australian Tax Office are also creditors.
TSS contracted Mr. Wolbers’ company to renovate the sports pavilion and day care.
The school now works with different builders.
Construction projects halted, forcing subcontracted workers to pack up and depart.
‘We didn’t deserve it, especially at Christmas,’ one Courier Mail reader said.
The creditor’s report lists just over $30,000 of the company’s roughly $275,000 assets as cash.
Red Sea Crisis: Should Construction Worry?
Original Source: Red Sea crisis: how worried does construction really need to be?
As Houthi rebels block shipping, industry executives discuss the impact on the supply chain.
Rebel militants target Red Sea cargo ships. Building asked industry executives about any effects on the construction supply chain.
What’s up in the Red Sea?
After Hamas’ October attacks on Israel and Israel’s bombardment of Gaza, a Yemeni Houthi rebel unit has attacked southern Red Sea ships.
Houthi attacks on cargo ships began in November. The group believes Israeli-affiliated ships are being targeted, although other commerce ships have also been fired on.
Hamas’ Gaza allies, the Houthis, are thought to be sponsored by Iran.
After weeks of warnings, the UK, US, and three other western allies bombed 13 Houthi sites in Yemen last week.
The Houthis called the assaults a “mistake” and “the greatest folly in their [the UK and the US] history” but said they would continue.
Whatever happened to shipping?
The Suez canal, at the top of the Red Sea, offers a faster route to Europe, although most freight companies avoid it due to military activities.
Nine out of 10 container ships are now rerouted around the Cape of Good Hope at the southern tip of Africa, adding up to 20 days to Rotterdam.
Freightos reports that 40ft containers from the Far East to northern Europe have tripled in price since December, from $1,170 to $4,400 last week.
How worried should we be?
Noble Francis, economics director at the Construction Products Association (CPA), encourages prudence but suggests the industry not panic yet.
“It is certainly an issue to keep an eye on, especially given the number of large one-off disruptions that we have had in recent years; global pandemic, lockdowns, supply chain issues, war in Ukraine, energy and commodity price spikes,” he says
Companies should source from a secure, diverse supply chain, not just the cheapest. They must also be adaptable to handle the enormous one-time events that will come continuously yet unpredictably.
Iain Parker, head of London cost management at Turner & Townsend Alinea, says regional shipping issues have not yet affected the business. “We have not seen or heard of any real impact on construction,” he says.
However, “We know from experience that these situations are very delicate and a heightened or prolonged situation would not be welcome and runs the risk of becoming more of a business issue.”
Construction isn’t overexposed
Francis notes that three-quarters of UK construction items are created in the UK and unlikely to be affected, unless machinery components are.
Two-thirds of the 24% of construction items imported are from EU nations, thus they are mostly unaffected. The UK buys the most building products from China, thus Asian imports will be affected.”
British Merchants Federation CEO John Newcomb says: “At this time it is difficult to predict the impact on UK businesses. Product prices have not changed here, but if the disruption persists, they may.”
Newcomb said the BMF and CPA, which chair the CLC’s Material Supply Chain Group, will “work with government and industry to monitor the developing situation”.
Home Builders Federation executive director Steve Turner says he has not been informed of any issues with its members’ supply chains.
The majority of materials for new homes are UK-sourced, and those imported are primarily from Europe, so the impact will likely be less than when Russia invaded Ukraine or with covid.”
What items are risky?
Francis warns that delays and price increases may affect electrics, white goods, lighting, kitchen and bathroom products, ironmongery, and plywood.
Turner said Chinese solar panel deliveries may be affected.
The limited number of delayed or scarce items may have solutions, according to Arcadis head of strategic research and insight Simon Rawlinson.
As for the things that are frequently sent, they’re lightweight and can fit in a container. These are tiny things like bathroom fixtures, he explains.
“Compared to other inflationary pressures, the actual cost of transporting an individual component part will be manageable. Though not great, it’s manageable.”
It’s not as bad as two years ago.
business leaders said the business has faced greater challenges recently, such as when the cargo ship Evergiven blocked the Suez canal in March 2021.
Two and a half years ago, ships couldn’t get into ports because there wasn’t enough room to unload cargo, Rawlinson adds.
The situation differs from 2021, when the Evergiven shut the Suez canal after global lockdowns caused supply chain challenges.
Noble Francis, CPA, economics director
Multiple supply chain impediments occurred. What we’re witnessing is a predicted stretch in delivery times for things where you can probably acquire an alternative.”
Francis believes the industry’s three-year crisis has made it robust.
How much worse will the UK housebuilding recession get?
Francis thinks the scenario is different than when the Evergiven closed the Suez canal, which occurred after global lockdowns caused supply chain challenges.
“A 40ft shipping container from China to Northern Europe cost $1,500 in summer 2020 and $14,500 in October 2021, so the cost rises we see now are nowhere near that.”
‘If it continues, costs may rise’
Arcadis CEO Alan Brookes says: “We’re not seeing an impact now but it depends on how long it lasts. If everyone keeps diverting trade, supplies may be delayed.
The actual risk is inflation, precisely when we think we have it under control.
Increasing inflation undermines confidence. The world needs stability. Everyone relies on confidence. People become hesitant when circumstances are uncertain.”
If everyone keeps diverting trade, supplies may be delayed. The actual risk is inflation, precisely when we think we have it under control. – Arcadis COO Alan Brookes
Despite the early stages of the crisis, Francis says the CPA has not observed big affects on construction product costs.
“Clearly, if disruptions persist, it will significantly affect some imported products through delayed supply and freight price increases,” he says.
“Current product supply is not an issue, and UK construction product prices have been falling recently, with prices 2.3% lower in November 2023 than a year earlier.
Although building product costs are 38.5% higher than in January 2020, pre-pandemic, enterprises on fixed-price contracts signed years in advance are especially affected.
Summary of today’s construction news
Overall, we discussed Project starts in London rose 29% from the third to the fourth quarter of 2023, following an 11% decline in 2022, going against the national trend. In the last quarter of the year, private housing project starts increased by 19% over the previous quarter, although they were still lower than in 2022. At the same time, Open Doors from Build UK gives viewers an exclusive look at construction sites and workplaces, illuminating the numerous job opportunities in the sector. Guests may get a feel for the company at more than 150 events around the UK. The Suffolk government has given the go-ahead for the two-unit Sizewell C nuclear power station proposal, which was previously known as a Development Consent Order (DCO). In July 2022, the two EPR units supplied by France were given the green light to begin construction. In addition, a different construction firm voluntarily entered administration, which effectively put a stop to all ongoing projects. One eighteenth of the house-and-land packager’s projects are currently on hold. There were eleven layoffs and ninety-nine customers impacted. The constructor could not be reached by some of the clients. Furthermore, business leaders are debating the effects on the supply chain as Houthi rebels jam shipments. Rebel militants attack cargo ships in the Red Sea. If there were any repercussions for the supply chain for construction, Building wanted to know from industry leaders.