Edward Seager, MD of Bennetts, looks at the state of our industry – how Carillion’s collapse could benefit third parties, opportunities in the residential market and why innovation is the key to growth.
Much has been written about Carillion over the last few months, the greed and the lack of financial control, the damage to suppliers, the support it was given by the government, and some reports predicting it will affect the whole construction industry – as if they were the only business in the market.
The fact is there are thousands of businesses, big and small, that make up the construction marketplace, including niche suppliers like ourselves – businesses that are focused on sustainable growth and a good quality product or service, rather than shareholders, bonuses and the next quarterly results.
After such a wake-up call – which Carillion certainly created – the market tends to react and respond, doing business in a different way. Instead of dealing with the top tier firms like Carillion, who did little of the work and simply contracted it out to other construction firms, they start going direct to the companies a little further down the food chain, where it’s more stable. It could, and I hope it will, open up more opportunity for a range of other UK construction businesses that are doing an excellent job.
That’s the short-term outlook, but what about Brexit, what then for construction? Quite simply we don’t know; until 2019 comes around and we see the political and economic situation unfold, we won’t know what impact it will have. The most recent quarterly figures showed a 2% decrease in output for the construction industry, however the fall was mainly due to a bigger drop in commercial and infrastructure work – a likely result of the Brexit uncertainty.
Meanwhile residential saw a small increase and this is reflected in our own order book, which is strong in residential work. My view is that the residential sector will remain buoyant for the foreseeable future. The fact is, we need at least another 250,000 homes in this country to meet the rising demand. This isn’t only fuelled by a growing population, but the drop in the number of people living in any one household, thanks to a higher divorce rate, smaller families, couples living in larger homes and more single professionals. There simply are not enough homes for everyone.
So, in a market that shows good prospects, but longer-term uncertainty, how can businesses stay ahead and produce year on year growth? I believe the key is innovation and concentrating on offering the very best service; adapting to the marketplace and having the right equipment for the right job.
At Bennetts we’re investing heavily in new, innovative cranes to meet market demand for equipment that can be used on city sites with less access, we are focused on delivering quality equipment, the best service and knowledge to our customers, and we are investing in training our staff to the highest levels. And we’re feeling pretty good about the future.