How will the construction industry recover from Brexit and Covid?
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The cumulative effect of Covid and Brexit has hit many industries hard. One industry that has been particularly affected is construction. Covid-19 led to a 35% drop in construction productivity. Brexit has further complicated things by causing extra supply delays and staff shortages.
Just how will the construction industry recover? It is unlikely to be all doom and gloom. This post looks into some of the problems the construction industry is facing right now and the likely solutions.
Solving supply chain issues
Brexit and Covid-19 have both caused huge delays in the import of building supplies. This has resulted in construction projects being severely delayed. Delays are not the only supply chain issue however – another big problem is the rapidly rising cost of supplies. Timber has been rapidly rising in value since 2017 but has risen in price by almost 50% since 2020 as a result of sawmill labour shortages caused by Covid-19.
Construction firms have already begun to find ways to adapt to the shortages and price spikes. More construction firms are starting to diversify their supply base. By using a range of builders merchants, it’s possible to shop around for pricing or use another supplier when there are delays. While shopping around has always been commonplace in construction, firms are now doing it much more frequently. Increased leverage caused by this has also allowed easier negotiation when it comes to pricing.
Tackling staff shortages
Many construction firms have been forced to make redundancies as a result of losses due to the pandemic. Some firms are now understaffed, which has had a negative impact on productivity. Brexit has meanwhile led to a loss in EU migrant workers – of which the construction industry hired heavily. This has led to further labour shortages, while also reducing available talent to hire.
The government has been pouring more money into funding construction apprenticeships and training schemes. This may help to build the talent pool, but this alone may not be enough. The best way that the construction industry can deal with staff shortages is to start embracing more tech and more automation. We are likely to see huge advances in robotics in coming years, which could help to take over many of the menial and dangerous jobs that are still performed manually.
Finding funding
Construction is an industry in which borrowing is commonplace to pay for upfront costs like materials and labour. Full payment from the client does not always come straight away and so funds have to be found elsewhere to get projects underway.
Banks have been less willing to give out loans since the pandemic first struck in 2020. This has resulted in many construction companies finding it much harder to acquire funding the traditional way. Fortunately, there are now many alternative funding options – some of which have become a lot more popular since the pandemic and Brexit. For example, companies like GrowthLine have established borrowing methods similar to taking out a large overdraft, which allow businesses to dip into funds up to a limit and pay them back in their own time. By exploring these funding options, construction companies can get the loans they need more flexibly.
