No Staff, No Stuff, What Do We Do?

The construction industry is getting hammered.

Global supply chain issues and an acute shortage of skilled workers are hindering the construction industry at every turn. They are causing major disruption at all stages of the building process, so how can stakeholders navigate their way through this turbulence?

Brexit, Russia’s invasion of Ukraine, Covid-19, inflation, energy price hikes and government instability and previously unheard of price increases have all contributed to the turmoil in the building and construction industry.

“The volatility in construction material prices experienced this year is unprecedented. The increases in lumber and steel prices are by far the largest recorded through available government data back to 1949. Aluminium prices have not increased this fast since 1995, plastic since 1976, copper since 2010. Average material prices for a commercial project increased an astounding 23% in the 12 months prior to August 2021.”

Henry D’Esposito, JLL Research Manager, Construction, in the firm’s Construction Outlook 2021.

The worst part about these records is that they are all being broken at the same time.

Living In A Material World

Price rises for building materials are around 15 - 20% higher than they were in 2021 and we can expect another 10% rise through 2023.

• Shipping costs for materials such as timber, steel and electrical itms rose by an astonishing 500% in the year between June 2020 and June 2021. 
• Imported plywood has risen 82% and imported sawn or planed wood is 64% more expensive than it was in June 2020. Stocks of Swedish timber are at their lowest levels since the late 1990s. 
• The lead time for delivery of plasterboard and glass has gone from six days to eight weeks along with a 35% cost increase. Raised flooring has gone up by 30% and lead times are 8-12 weeks, up from 1-2 weeks. 
• Air-conditioning has also gone up in price, by around 25-30% and lead times are as much as four months. In addition, manufacturers won’t commit until orders have been placed.

While there is light at the end of the tunnel in terms of material costs with many experts predicting a plateau and possible decreases in late 2022, early 2023 and beyond, the real issue seems to be the labour shortage. 

Working 9-5….

In a textbook example of nominative determinism, Andrew Carpenter, the chief executive of the Structural Timber Association, believes the long-term issues surrounding the workforce are more acute than the price of materials.

ONS numbers show the number of UK construction workers in Q1 2022 was 263,000 fewer than in the corresponding quarter in 2019. Partly due to the fact that when building effectively stopped during the pandemic thousands left the industry never to return and partly due to the fact that there was almost a 20% decline in self-employed workers.

Notwithstanding anything else, workers are now demanding more money which also impacts overall project costs as businesses overpay to secure skills in short supply.

Fixing a Long-Term Problem Ain’t Easy

According to CHAS (The Contractors Health & Safety Assessment Scheme), the issue isn’t in the number of people looking for work, it’s an issue of perception. It’s about making a career in the construction industry seem desirable. Traditionally the domain of young to middle-aged white men, there are many who feel they don’t fit in.

The talent pool needs to be widened and the ‘office’ needs to be a diverse, inclusive place. Not a place that limits many people from different backgrounds coming into the industry and, crucially, staying.

Outreach also plays an important role in re-energising a declining workforce. Promoting a career in construction at school, college and university is vital to close the skills gap rather than people ending up on building sites because there’s no other options available. 

The industry needs people who want to do these jobs instead of people who think they have to.

Another way to bridge the skills gap is through re-education, or ensuring workers can upskill to widen their skill sets and elongate their careers. This involves construction companies investing money, time and resources to develop a fresh stream of skills from people that are already in the industry and encourages workers to look at opportunities previously unavailable to them.

This is also an important buy-in to people considering careers in the construction industry, knowing that they will be offered clear pathways for career progression through continual professional development.

It’s a slow burn but it will be very interesting to see how the post-pandemic industry moves forward.