Directors from construction group HMS weigh in on where the industry is now and where it’s going in this five-question interview.
HMS is a subsidiary of Torus and has projects across the North West. It boasts an annual turnover of more than £70m and invests 100% of its profits into local projects and the Torus Foundation charity. With experience in constructing large housing developments, care homes, schools and even police stations, HMS is well-positioned to have an outlook on where the construction industry is now.
To that end, Place North West decided to take advantage of their expertise over a quick interview to get a market update.
Looking at the market now, would you say it’s healthy? Weak? Thriving?
Paul Worthington, managing director: “The order book and client demands look healthy, but our ability to effectively meet those demands is the challenge. Lack of available skilled and knowledgeable labour is our Achilles heel.”
Ian McGillivary, commercial director: “There is some fragility in the market. With rising prices, we are concerned how this may affect the viability of some future projects.”
Alison Brown, maintenance director: “There are different market segments. Mine is repairs and maintenance, which is a different market to construction but there are some commonalities of issues. A market number of organisations locally brought R&M back in house, so mainly smaller bids are coming out locally. Some larger national contractors are keen to get a foothold and replace works that have gone in house. R&M remains a constant. There are always contracts coming into the marketplace. The scale and scope are fairly static, but some changes on the commercial models are being brought out.”
John Barrow, construction director: “The construction arena is booming at the moment and many contractors are busier than ever. Order books are full and everyone is trying to engage the same contractors, trades, suppliers so this compounds the issues discussed in the podcast.”
What are the overlooked areas in the market?
McGillivary: “Future investment and planning. There’s a lot of short-term thinking and with low margins too. People either can’t or aren’t willing to invest for the future.”
Worthington: “Recruitment. As an industry, we have an ageing workforce and will begin to lose that expertise over the coming decade. The lack of margin in the industry has resulted in the lack of available placements. During the last apprentice recruitment campaign, we had over 600 applicants for eight positions – so there is no shortage of interest. Encouraging women into the industry, particularly in operational or craft roles, is also not changing fast enough.”
Barrow: “The bigger picture is the focus on green technology, especially in the new-build arena and the push to move away from gas and fossil fuels.”
What are the trends you guys are spotting?
Brown: “Exploring technology linked to self-serve and diagnostic techniques. Other issues are linked to fall-out from Grenfell in terms of building safety.”
Worthington: “Common across all our market areas, there is much more interest in ethical business practices. It is linked to how businesses trade, how staff are treated, supported and developed, and the increased weighting towards quality and sustainability.”
McGillivary: “There’s lots of discussion on the green agenda, but not a lot of solutions to put in place yet.”
Barrow: “A drive to the bottom appears to be evident. Margins have decreased and risk increased. There is more emphasis on the design and build aspect, which contributes to the risk element.”
A year from now, where do you think the market will be?
Worthington: “Construction really didn’t retreat. Yes, we had a cessation for a short while and we have had to adapt with new ways of working but we are a practical bunch that overcomes challenges. A year from now I fear we will still be under pressure to meet demand. Managing the current economic circumstances is something new to many of us and we need to be at the top of our game.”
Brown: “I agree. I think R&M will remain in a strong place. We need to maintain everything that is already built. as well as all the new properties coming into the marketplace. Perhaps we may see the scope of works changing to address green issues.”
Same question, but 10 years from now. Where is the market at?
Worthington: “I think it will be a difficult few years ahead as the industry continues to modernise and develop. The speed of technology development and the inevitable change that this brings will be profound. In ten years time though I think we will be in a much healthier place. This is on all fronts: availability of competent construction staff, the use of more sustainable construction materials, improved quality through efficiency and data, better communication and transparency of activities for customers… the odd hoverboard like Marty McFly improving safety on site. Maybe I’m an optimist.”
Brown: “Again, I agree. It will still be an active market. For me, the biggest thing will be the technology changes across all aspects of the service. Hopefully, we will be more intelligent in our use of data and self-service for customers through greater use of augmented technology and other technologies, use of technology advances on type of materials being used and replacing existing products with smart products that we can look at remotely. There will be a change in the skills profiles of engineers as new technology products are used in both maintenance and construction. Expect less gas in products, more use of electrics or alternative technologies, and smart properties where wifi is essential.”
Learn more about HMS at hmsworks.co.uk.