IN FOCUS | Why the North’s construction industry can weather the storm

Prime Minister Keir Starmer’s government has watered down its pre-election optimism with a slew of dismal warnings of economic hardship ahead of the Autumn Budget – but that has not diminished the confidence that David Saville of Caddick Construction has in the built environment’s future in the region.

Saville is the North West managing director for the family-owned construction firm, part of the wider Yorkshire-headquartered Caddick Group that includes Caddick Developments and build-to-rent developer Moda.

All Saville has to do is look at his own company’s workbook to be reassured that whatever doom and gloom comes from news headlines – whether its global contractor ISG’s collapse or another ominous statement from Labour – the Northern construction industry is doing well.

“We have a strong order book of varied profitable work,” Saville said, citing Caddick’s work in the defence, residential, industrial, health, and education sectors. While the healthcare sector has quietened, the industrial market has made up for it.

“I think confidence suddenly came into the market in the second quarter and now we’re seeing a lot of activity – an awful lot of activity,” he said.

Beyond the world of industrial, Caddick has been busy. The company is on site delivering the resi side of Glenbrook’s £45m Lumina Village in Trafford, a £9m University of Cumbria facility in Barrow, and Loreto College’s £10m expansion in Hulme – to name a few.

That is only part of the company’s North West pipeline – a pipeline that has contributed circa half of the family-owned construction firm’s £318m turnover.

Continuing the steady growth in a sustainable way, with a focus on improving the bottom line has been Saville’s goal since he joined Caddick in January. Branching out of Caddick’s staple industrial and residential projects has played a role in it.

“We have effectively called ourselves a beds and sheds business,” Saville said “We are probably underselling ourselves considerably as a result of that now – to call ourselves ‘beds and sheds’ is probably keeping our light under a bushel, really.”

Caddick’s order book is growing, not stagnating as one might fear given threats of economic hardship ahead.

But that does not mean there have not been challenges.

The skills gap is widening. Viability is always a concern. Projects take longer to get on site. But none of these are insurmountable, Saville contends.

Manifesto reminders

Government policies could go a long way towards alleviating these pain points.

As Labour meets for its annual conference in Liverpool, Saville had one message for the group – to remember its manifesto, particularly the promise to stimulate growth

Stimulating the nation’s economy requires having a strong construction industry, he argued.

“Labour’s manifesto pledge to grow the economy, particularly through construction and infrastructure, needs to be reinforced by policy,” Saville.

“Low interest rates are critical but alongside this, investor confidence is key for funding and talk of deeper austerity measures will impact investor confidence, which will be counterproductive to growth that will inevitably need to be led by the private sector in the short-to-medium term.”

He celebrated the commitments to improve water infrastructure but contended that there’s another utility that needs attention – power.

“It’s really difficult to deliver projects at the moment because our power infrastructure is so inadequate,” Saville said.

The government also has to focus on skills.

“As we see growth in the construction industry, I wonder how we’re going to cope capacity-wise over time as we deliver these projects when we’re not feeding the young, new talent into the industry through colleges and universities,” Saville said.

Investing in apprenticeships could go a long way to shortening the gap. Caddick is doing its own part in this as well and has committed to growing its own talent from apprentice level up to senior leadership with 74 apprentices and graduates across the group.

Caddick is also pursuing ways of recruiting those who have left the job world for a time, whether that means they come from a background of homelessness or had to pause their career for another reason.

Insolvency risks

With the news of ISG’s administration breaking last week, the construction industry is justifiably on edge. But Saville maintains his confidence in Caddick’s future.

“Over 85% of our work won is repeat business through regular clients and consultants who value our collaborative, no-nonsense approach based on values such as fairness and responsibility,” he said.

He also expressed optimism about Caddick’s own supply chain.

“We have good, strong relationships with our supply chain,” Saville said “We’ve worked with them for many years and want to grow them with us.”

As Caddick gets more work, and pressures increase on that same supply chain, he stressed that the company keeps communication lines flowing

“We are working even more closely with our established supply chain to understand their challenges and provide a regular pipeline of work that pays both fairly and on time,” he said.

Regulation changes

Aside from economic pressures, the construction industry is facing further obstacles when it comes to increased regulation. This is largely in the form of the Building Safety Act – a transformative piece of legislation that, while Saville contends has been necessary, has nonetheless been disruptive.

“The BSA is impacting procurement of residential work which makes up 50% of our turnover,” Saville said.  Caddick Group is well prepared to deal with the BSA but unfortunately, it is clear that the regulatory bodies are less so.

“We are seeing a lot more mid-rise development where we regularly operate and for higher rise schemes, an inevitable move to a two-stage procurement to ensure the design is developed effectively for gateway sign-off.

“This is extending lead in times for residential works starting on site, which needs to be balanced with work that turns over with greater pace such as many of our industrial and logistics schemes,” he said.

More time spent in pre-construction is not necessarily a bad thing, Saville contended. The industry just needs to adapt to this new way of working.

“I’m adamant that the steps we’re taking, particularly around high-rise buildings, to get the design fully agreed and to minimise changes will ultimately drive productivity on site,” he said.

All hail the North

Despite the construction industry’s insolvency risks, government regulation changes, and the growing skills gap – Caddick is on an upward trajectory.

This time next year, Saville is expecting his North West team to positively contribute to a construction group turning over circa £500m and remaining profitable.

Success will not see the company change its focus – or its loyalty to its region.

“We are a proud Northern business,” Saville said “We think there’s plenty of opportunity in the North to sustain our business and help it grow without the need for us to change the dynamics of the business into something very different.”

The North, he said, is ready for the limelight.

“The North is becoming more connected and by becoming more connected, I think we’re becoming stronger,” Saville said.

“The region has become a more viable place for investment and we’ve developed a real can-do attitude.”

Gone are the days of constantly looking at London and the South as a comparison.

“We used to worry about what was happening down South and if investment was going to come up here – I don’t think that conversation happens anymore,” Saville said. “I think we’re confident in ourselves.”

Learn more about Caddick at caddickconstruction.co.uk.