Delegates at the annual FIS Conference experienced a series of insightful presentations and interactive discussions on post-Brexit-themed topics, including outline forecasts for construction markets, recruitment and labour challenges in the finishes and interiors sector, and future implications on BSI standards.
Brexit dominated the 2016 FIS Conference as speakers tried to reassure members, while admitting there were still so many unknowns that nobody could be sure what would happen. A live poll recorded that 74 per cent of the audience had voted to remain in the EU.
The packed conference at the St Pierre Marriott hotel near Chepstow heard from Professor Noble Francis, economics director at the Construction Products Association. The normally bullish Professor Francis blasted other economists for their inaccurate doom-laden predictions of immediate recession and stock market collapses.
He said Goldman Sachs had come out within days of the leave vote predicting the economy would fall. “It was rubbish,” said Professor Francis, admitting there was early instability but many of the losses were quickly recovered.
He said the lesson was that “it’s unrealistic to forecast accurately five years ahead”. Until the Brexit decision is actually enacted – by the government triggering Article 50 – nobody could know what was going to happen. Professor Francis said his own forecasts would now only run until 2018.
He said immediately post-Brexit nothing changed. Consumer spending continued as nobody had lost their job or had their pay cut. But investment would fall in the future due to the uncertainty, so economic growth would fall from the current 1.7 per cent – the highest among G7 countries – to just 1 per cent next year.
“Brexit doesn’t mean investment falling off a cliff,” he said. He warned that contract awards had fallen 9 per cent in July and August and that large contracts may not be signed. But he predicted that smaller and medium-sized contracts would continue.
Questioned later in the conference, Professor Francis did admit that he believed the economy would go through two quarters of decline – the technical definition of a recession – but that it would be marginal and the impact would not be catastrophic.
Fears that product, business and management standards used across the industry might be sacrificed in the bonfire of EU regulation demanded by Brexiteers were also quashed. Kieran Parkinson, market development manager at the British Standards Institute (BSI), put the record straight, dispelling two main myths.
The UK is a leading light in setting many of the European and international standards – the standards are not “imposed” from Europe, Mr Parkinson said.
And the European standards bodies CEN and CENELEC are not part of the EU but are private bodies.
CEN, for example, already includes 33 countries, including five non-EU countries – Norway, Switzerland and Iceland, which are members of the European Free Trade Association, plus Macedonia and Turkey. And 75 per cent of CE standards have nothing to do with EU directives or legislation.
Mr Parkinson made clear that this could well continue post-Brexit as BSI is itself not an arm of the UK government but an independent private company established under Royal Charter.
He said: “It is our ambition to remain a member of CEN and CENELEC.” But he warned that excessively hard Brexiteers could ruin that. “The UK government must not take any action to prejudice BSI’s full membership or necessitate a change to the statutes of CEN or CENELEC,” he warned.
Pressed by FIS chief executive David Frise to be explicit about what the government might do in the worst-case scenario, Mr Parkinson clarified that the UK government might insist that UK standards be different from European standards to prevent European firms competing in the UK market. That would be a game changer. The UK would become isolationist.
Recruitment expert Trevor Rees, of Rees Worx, told delegates that whatever happened they could still make the most of the UK market, UK workers and UK opportunities. He flagged up the business opportunities open to construction firms and explained how to get the best from a well-run recruitment strategy. He warned against “talking ourselves into a recession”.
But, when delegates were asked at the end of the conference if they felt more confident about the future by the end of the day, only 40 per cent said they did.
Forecast performance across the sectors
The Construction Products Association’s economics director, Professor Noble Francis, outlined how key sectors of the economy were expected to perform.
He said the housing market remained under-supplied and with government subsidy on 27 per cent of new house sales, there would be continued growth. But he warned that if growth slowed and wages failed to keep up with inflation, then that would knock the market.
Uncertainty has hit the commercial sector hardest. The three big retail areas in London – Canary Wharf-Docklands, the City and the West End – account for a staggering one quarter of the UK offices market, he said. They are already at peak, with no room for growth. There is a similar level of activity in Birmingham and Manchester.
Professor Francis warned that he expected commercial office work to fall away in the second half of next year.
Problems in the retail sector are nothing to do with Brexit, he said. Big supermarkets, which have driven construction business, have been losing out to smaller rivals.
Retail sales are up 6 per cent but online sales have risen 18 per cent, switching the focus to warehouses that do not need the interior finishes of retail units.
Infrastructure was the only area of continuing growth, put at 6 per cent next year and 10 per cent in 2018, with possible interiors work on stations and adjoining commercial towers along the new transport routes. Education is expected to grow and Professor Francis said there would continue to be work in health, but only small to medium-sized projects and not major works.
There may be an opportunity for refurbishment, rather than fit-out, he suggested. There may also be more openings in the regions as companies move work out of London.
He warned that commodity prices would rise. Nearly all soft wood in the UK comes from Sweden and that has already seen a 17 per cent rise in prices, he said. Costs for HVAC and wiring were all going up too.
One other fear expressed was that with overseas workers returning home – that is already happening as they are made to feel unwelcome before any scrapping of free-movement rules – there would be increasing skills shortages and a rise in union militancy.
The future of European standards
A staggering 95 per cent of the work of the BSI is European or international, market development manager Kieran Parkinson told the Conference.
The BSI has “a seat at the table to influence decision-making” on the European and international standards bodies, and it plans to keep that after Brexit. The European bodies are independent of the EU, so that should be possible, he said.
BSI employs 3,525 people in 76 offices in 30 countries. Many of the world’s standards originated in Britain – none are imposed on Britain by Europe.
Under the rules of the European and international bodies, if a particular country’s standard is chosen to be the base for a new agreed overarching standard, all other countries cease working on their own standards and concentrate on agreeing the international version.
Post-Brexit, BSI’s positon on the international standards bodies is safe, as is its role on the European technical standards body ETSI. “We have had strong support from other members of CEN and CENELEC,” Mr Parkinson said.
Maximising sector opportunities
Recruitment guru Trevor Rees, of Rees Worx, wanted delegates to be positive and to seize opportunities. He flagged up framework projects where construction money was available:
- Scape national construction mega framework – £7 billion
- EFA new schools construction framework – £6 billion
- Public sector framework – £5 billion
- P22 healthcare framework – £5 billion
Mr Rees said the industry needed to advertise how good it was to make it more attractive to school leavers – he praised the Institution of Civil Engineers for its work in this area. He also said apprenticeships were an opportunity and firms should try to have apprentices making up 5 per cent of their workforce.
He suggested firms have a recruitment plan and work with professionals. They should publicise and communicate what they do and keep records of potential recruits, even when jobs were not yet available.
He warned that skilled labour from Poland was already returning home as the Polish economy recovered and the UK made them feel unwelcome.
Taking responsibility for skills development
Helen Yeulet, the new FIS skills delivery director, said FIS needed to tackle the sector’s training and skill shortage. Her rallying cry came as 72 per cent of delegates said they were struggling to recruit skilled staff.
“We need to step up and take responsibility for training and skills in our sector,” she said. “So the FIS board has decided to spend some of its reserves doing just that. FIS is determined to have the entire industry fully and accurately CSCS carded by 2020, to attract 1,500 new entrants to the sector and to increase the CITB grant claimed by member firms from the current 35 per cent to 50 per cent.”
The FIS CourseSight portal of approved training providers, which automatically updates CSCS cards once training is completed and automates the claiming of CITB grants, has already established FIS as a leader in the field.
But FIS is not relaxing. Ms Yeulet said she wanted to “sheep dip” all approved trainers – immersing them every year in the sector’s latest technology and skills so they were always at the forefront of best practice.
She said members should be approached for a training needs analysis to confirm what was required. Help would be given to firms with trainees and FIS would handhold firms wanting to share apprentices. FIS also wanted to develop a recognised continuing professional development (CPD) programme.
FIS is to take on two project managers under Ms Yeulet’s lead, and at least one other project support worker. Chief executive David Frise said this was about FIS giving its members a better service.
Delegates were also told that FIS had agreed a deal with major construction law firm Bond Dickinson to provide members with a free legal helpline. Solicitor Kara Price said members could make four queries a month, including sending documents. They would get an hour of free advice covering payment terms, contracts, disputes and problems with bonds and warranties.
Find out more: www.thefis.org