In today’s news, following the recent victory of Labour in the general election, the chancellor, Rachel Reeves, presented her first budget to the building industry in the United Kingdom. The construction industry has produced a variety of responses to the budget. During this time, VINCI Construction will complete the acquisition of FM Conway, a public works business based in the United Kingdom, in order to increase its position in Southeast England. Moreover, talks about the potential domino impact that decisions made by the government could have on the construction business in the United Kingdom. The British economy relies heavily on the construction industry. Jackie Maginnis, Chief Executive Officer of the Modular and Portable Building Association (MPBA), highlights the larger repercussions of halting or stalling the execution of public projects in a political context that is becoming increasingly unstable. Moreover, Coleman Construction & Utilities Limited, a company that specializes in civil engineering and construction, was purchased by Nexus for a total of £5.38 million.
Budget Contains ‘mixed news’ for UL Building
Original Source: Budget offers ‘mixed news’ for UK construction sector
In the wake of Labour’s recent general election triumph, chancellor Rachel Reeves presented her maiden budget to the UK construction sector, which has provided a range of reactions.
Employers’ national insurance rates will rise from 13.8% to 15%, a 1.2% increase; nevertheless, the industry will receive a boost of £1 billion to remove hazardous cladding, and additional monies will be directed to the Affordable Homes Programme. Additionally, Rachel Reeves has verified that GB Energy will be established in Aberdeen next year with support from the government.
While the Chartered Institute of Building (CIOB) applauds more money for infrastructure, its director of policy, research, and public relations, Eddie Tuttle, cautioned that small and medium-sized enterprises (SMEs) are “likely to increase financial strains” due to rising taxes.
“The cyclical, boom-bust nature of the sector, along with recent economic hardships, have created a difficult environment for these businesses,” he noted, adding that over a fifth of UK SMEs participate in the construction industry. Twenty percent of all company bankruptcies in 2024 have been in this sector, and the news that about 11,000 businesses have gone under since 2022 is deeply concerning.
The increase in expenses for small and medium-sized construction businesses might have a catastrophic effect, even while we recognize the importance of strengthening public finances and reorganizing fiscal regulations to attract more investment. New housing and infrastructure, as well as the upkeep and repair of older structures, rely heavily on SMEs.
“Small and medium-sized enterprises (SMEs) play an essential role in our economy, and greater taxes without regular evaluation of their effects on vital industries like construction could harm this vital sector.”
Since building safety is a “critical concern” for the construction sector, the CIOB is glad that financing for remediation of harmful cladding has been recognized, according to Mr. Tuttle. This is especially true in light of the second phase of the inquiry into the Grenfell tragedy.
Increased funding for the Affordable Homes Programme and the promise to provide infrastructure were met with enthusiasm by Tim Balcon, chief executive of the Construction Industry Training Board (CITB), who expressed gratitude for the industry’s support.
The government’s homebuilding plans require an additional 152,000 people, according to his analysis. And that’s not even include the quarter of a million construction workers needed to meet all the projected demand until 2028. “Improving the pipeline of workers and ensuring a shared understanding of competence between industry, government, and CITB is defined are two examples of how the skills system as a whole needs to evolve and improve in order to address the homebuilding and infrastructure delivery challenges.”
A industry that is severely lacking in new talent will see a “dampening of the appetite for recruitment” due to rises in National Insurance and labor expenses, according to Richard Steer, chair of the property and construction consultant Gleeds. He called the budget’s support for HS2’s London extension “sensible,” but he said it didn’t show that the government was taking training, retention, planning reform, and reaching net zero goals any more seriously than the previous administration.
The incoming administration has a chance to prove to the business community that it is serious about giving stability and certainty through the budget, according to Steve Mulholland, CEO of the Construction Plant-hire Association (CPA).
Infrastructure spending on roads, rail, hospitals, schools, and housing will play a role in the new era of stability and growth, he said, adding that this was not part of the Industrial Strategy. While it’s great to hear that fuel duty will stay the same, it’s disheartening that businesses will have to pay more for national insurance and that the plant-hire industry can’t use the Full Expensing Allowance as it is. Before this may take place, we require more information regarding the fiscal requirements. We eagerly await additional information.
The budget “not being focused on the needs of business,” according to Clive Dickin, CEO of the National Access & Scaffolding Confederation (NASC).
The significance of attaining sustainable economic growth was reiterated in a letter that he got this morning from Rachel Reeves, he added. In that letter, she also acknowledged our belief that the government’s growth ambition can only be achieved through a robust construction sector that is backed by safe and high-quality scaffolding and access equipment and a trained workforce. Regrettably, this budget conveys a concerning message. All of which are essential to the future of the economy—a vision that is focused on businesses, incentives for quality employment, and innovation—are lacking from it.
The National Living Wage (NLW) was raised 6.7%, which Mr. Dickin deemed “excessive.” He cautioned that this increase will put firms off hiring entry-level workers and could lead to inflation. During a crucial period for the UK economy, he continued, businesses will be “inhibited” from “recruiting and even maintaining staffing levels” due to the increase in employers’ National Insurance contributions. “This decision will put new recruitment at risk for most employers and reduce their ability to further reward existing staff,” Mr. Dickin said, adding that while the smallest employers did receive some extra support, the decision overall will discourage new hiring.
A “challenging” budget for small building enterprises, according to the Federation of Master Builders.
The Chancellor of the Exchequer presented a mixed budget with encouraging plans for the future of the construction industry in difficult economic times, according to Brian Berry, chief executive of the FMB. However, he warned that firms managing their company finances would face substantial challenges as a result. Just when small and medium-sized construction companies (SMBs) need a boost, they may have to take a hit before things improve, just like many other people in the nation.
“At a time when the construction industry is in critical need of additional workers, the chancellor’s plan to substantially increase employers’ National Insurance contributions would cause enormous difficulties for enterprises seeking to hire new employees. Nonetheless, the increase in Employment Allowance and the raise in the apprenticeship pay are both positive developments that will encourage more young people to pursue careers in construction, and the chancellor has done the right thing by protecting small businesses. Those in the construction industry who are planning to retire soon and sell their companies may potentially be subject to capital gains taxes.
UK Expansion with FM Conway Takeover by VINCI Construction
Original Source: VINCI Construction expands UK presence with FM Conway acquisition
FM Conway, a UK public works company, will be acquired by VINCI Construction to strengthen its presence in Southeast England.
The acquisition will boost VINCI Construction’s roads, civil engineering, and specialist services capabilities and strengthen its UK market position.
Both corporations don’t reveal deal finances. The transaction is scheduled to close in early 2025 pending regulatory approvals.
FM Conway specializes in roadworks, civil engineering, asphalt and binders, water and drainage management, lighting, cabling, and traffic control.
Established in 1961 by Francis Michael Conway, the company is headquartered in Sevenoaks, Kent, and operates throughout England, mainly in the Southeast.
Given VINCI Construction’s 1,300 business units in 100 countries, FM Conway’s integration should benefit the company.
VINCI Construction builds buildings, civil engineering structures, and mobility infrastructure using circular economy principles to offer sustainable and innovative solutions to its customers.
The VINCI Group generated approximately €6bn (just over £5bn) in revenue across its three business lines—concessions, energy, and construction—and employed 13,000 people in the UK in 2023.
Revenue rose more than 3% to €52.3bn in the first nine months of 2024 in mid-October. VINCI Construction’s third-quarter 2024 revenue fell to €23.5bn. The company expects to sustain business levels from 2023 and increase its operating margin in 2024.
The Chicago Transit Authority awarded a design-and-build contract to VINCI Construction Grands Projets and Walsh Construction Company for a 9km line extension and four new passenger stations at the end of October.
The business also stated that the Balfour Beatty-VINCI joint venture reached the halfway point in the HS2 Bromford Tunnel project, a major milestone in the London-Birmingham route.
Government Choices May Ripple Across the UK Construction Industry
Original Source: The potential domino effect of government decisions on the UK construction industry
Construction is crucial to the British economy. Jackie Maginnis, CEO of the Modular & Portable Building Association (MPBA), discusses the wider effects of slowing or stalling public project delivery in a shifting political landscape.
Construction accounted for 6% of UK employment in March 2024 and 6.1% of GDP in Q1 2024, according to the ONS. PwC predicts a small fall in UK building activity this year, with growth returning in 2025.
Has construction finally turned a corner? It may be, but we need government help.
Rachel Reeves “paused” the past government’s £20bn New Hospital Programme in July. The health secretary, Wes Streeting, said Labour will finish the proposals, but when?
The health secretary told the BBC that this may take longer than expected: “I’ve got to make sure firstly the money is there, secondly that the timetables are realistic and we’ve got the supply chain, the labor and the resources that we will need, and thirdly I’ve got to balance the need for new bricks and mortar alongside the need for new te
His words alarm me on numerous levels. The supply chain is in place, but a major delay will compromise it. Slowing or stopping the build of the 40 new hospital designs under the program will have a major impact on patient care and many of our delivery program members. Modular manufacturers worked 24/7 during the pandemic to quickly build essential facilities.
MMC is essential to health and education building programs.
We’ve learnt from the residential industry that stop-start housebuilding isn’t good for high-tech volumetric modular manufacturing.
Maintaining digital construction and sophisticated manufacturing requires significant investment and a consistent work funnel to fund overheads.
The MPBA and our members have lobbied government for years to improve political awareness, grasp the technology, and fully embrace the benefits of innovative construction processes to public projects.
Referring to “bricks and mortar” ignores digital design and manufacturing advancements that drive modern construction approaches.
Wider UK construction industry impacts
We recognize the issues affecting healthcare and education providers; halting or delaying capital construction programs will affect the supply chain.
Before taking dramatic action, consider the repercussions. Healthcare, education, and the building industry need a long-term strategy and investment plan.
MPBA
The Modular & Portable Building Association helps all industry sectors. Leading best practices, the association serves on various committees for members.
Most importantly, the association guarantees that changing government regulations and choices for the construction industry do not ignore the volumetric modular sector.
The MPBA and its members believe that manufactured buildings’ benefits begin in the factory, continue on the construction site, and endure a lifetime.
Modular construction meets client and end user needs for cost, time, quality, and safety with its potent combination of regulated deliverables and adjustable outputs.
Nexus buys Coleman Construction & Utilities for £5.4m
Original Source: Nexus expands with £5.4m Coleman Construction & Utilities acquisition
Nexus acquired civil engineering and construction firm Coleman Construction & Utilities Limited for £5.38 million.
Coleman does civil engineering and building in water, rail, highways, rivers, and marine.
Nexus argues the acquisition represents a ‘compelling strategic fit’ for the group to explore new areas.
In its trading update, the group reported a 23% increase in revenue to £52 million for the year ending 30 September 2024.
Coleman may offer expansion options outside of residential house building, the organization hopes.
Barry Coleman founded the company in 2000 to provide services in crucial UK infrastructure areas driven by climate change, environment protection, societal changes, and energy security.
Coleman is known for its ‘quality of service and client satisfaction,’ and Nexus wants to help it grow.
Coleman has grown revenue and maintained gross profit and EBITDA margins.
Revenues were £8.3 million and Adjusted EBITDA £0.7 million for the year ending 31 March 2024.
Nexus will pay £3.08 million cash and debt-free and c.£1.00 million after completion accounts.
A £1.30 million cash delayed consideration (£5.38 million total) will be paid over two years based on subject performance.
Nexus CEO Charles Sweeney said: “The acquisition of Coleman presents an exciting opportunity for Nexus to diversify into other critical UK infrastructure sectors, enhance our service offerings and drive future growth.
The Group may now take advantage of long-term opportunities that are less susceptible to economic changes.
Coleman’s reputation and skills in water, rail, highways, and rivers & marine enrich our portfolio, and we look forward to welcoming the Coleman team to Nexus.”
Coleman co-founder and managing director Barry Coleman said: “Coleman has grown significantly over the years to become a leading civil engineering and construction business.
Our success is due to our amazing staff, who have maintained the highest standards in health and safety, quality, and customer happiness.
“With Nexus’ support, we can grow our business and create new opportunities for our customers and Coleman employees.”
Summary of today’s construction news
Overall, we discussed “Mixed news” for the UK building sector according to the budget. While there will be a 1.2% increase to employers’ national insurance rates (from 13.8% to 15%), the industry will get a £1 billion boost to remove dangerous cladding and more money will go into the Affordable Homes Programme. It has also been confirmed by Rachel Reeves that GB Energy will be set up in Aberdeen next year with government funding. The acquisition will also help VINCI Construction solidify its position in the UK market and enhance its capabilities in road and civil engineering as well as specialist services. Among FM Conway’s many areas of expertise are civil engineering, traffic control, lighting, drainage management, asphalt and binders, and roadworks. Deal finances are not disclosed by either company. Given the necessary regulatory clearances, the acquisition is expected to completion in early 2025. Additionally, in March 2024, construction accounted for 6% of the UK workforce and 6.1% of GDP in Q1 2024, as reported by the ONS. PwC projects a minor decline in construction activity in the UK this year, followed by rise in 2025. On top of that, Civil engineering and construction for water, rail, highway, river, and marine environments are Coleman’s specialties. A “compelling strategic fit” with the acquisition, according to Nexus, will allow the company to expand into new markets. Revenue for the year ending 30 September 2024 increased 23% to £52 million, according to the group’s trading update.