Building Britain

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October 2014 |


We need a northern powerhouse, says Jim O’Neill Pages 8-9


Business Reporter · October 2014


Building Britain

Opening shots René Carayol


FEW YEARS ago, when I was serving on the board of Places for People, the government of the day was incentivising the construction industry to assist in building better schools. Working in partnership with the London Diocesan Board for Schools, Places for People, a large property management, development and regeneration company, became involved in a bid to redevelop St Thomas’s School in one of the murkier parts of the wealthiest borough in the UK, Kensington and Chelsea in London. As is the way with London, close to some of the most expensive property in cosmopolitan and expensive Notting Hill was the somewhat dilapidated St Thomas’s School, which lay on the Notting Hill Carnival route, between Ladbroke Grove and the Grand Union Canal. Constructed in the early 1970s, the original school building fell well short of contemporary standards and it had suffered from a lack of ongoing investment. Accessibility and security were poor; the classrooms were too small and there was insufficient space for teachers to support children with extra educational needs. There was no room for a library and the



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How a small state school shows that collaboration in construction can teach us all a lesson compact IT suite was not large enough to accommodate a whole class. Using a unique funding model, the school has been paid for using profit generated from the sale of top-quality apartments built above the classrooms. With no loss of playground space, the school has gained new facilities which have made teaching and learning so much easier and so much better. This was more than thinking outside the traditional building box, it was innovative, creative and real partnership in action. Places for People had embarked upon a seemingly expensive and risky plan to redevelop the school over two storeys, and then build on top two storeys of affordable homes/social housing, and then a further two storeys on the top which would contain luxury penthouses and apartments marketed

with “splendid views over the canal”. It has created a mix of homes – with 55 luxury apartments sold, 10 for shared ownership and four for affordable rent. The development has been carefully designed so that the 69 apartments have separate entrances and do not directly overlook the school or playground. All the 55 luxury apartments and penthouses were sold “off plan” and raised more than enough money to build St Thomas’s into a state-of-the-art modern primary school which encouraged people to move into its catchment area. This has, over the intervening years, enhanced and further diversified the surrounding neighbourhoods. The major lesson was that top-quality schools can act as the prime catalyst for enriching and strengthening communities. St Thomas’s has changed the face and the feel of a once-rundown part of Notting Hill. The wealthy, the savvy and the middle class are straining to join the locals and get their children into the brilliant school, which is there for all to benefit. The pioneering redevelopment of a 1970s primary school in the London Borough of Kensington and Chelsea is a prime example of how high-quality homes for all can mix with an educational environment for young children. By thinking a little differently about construction, we can change our communities for the better – for ever. Collaboration in construction is the new leadership.

Business Reporter · October 2014


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Building Britain

Renewing the foundations of British construction By Tim Adler U K CONST RUCT ION plc remains one of the most important sectors of the economy, yet it remains the most vulnerable when the economy takes a downturn. Building firms laid off 20 per cent of their workforce at the height of the recession, which is why so many are struggling to find skilled workers. Output levels also fell by 20 per cent. Insolvency levels rose while supply chain orders dried up and many homebuilders are now struggling to get back to pre-recession levels. The cost of materials is going up as well, forcing building firms to import goods from overseas – and there is a skills shortage, with electricians, plumbers and bricklayers in especially short supply. The recession affected the big household name firms most of all. Shares in Balfour Beatty fell by more than 20 per cent after the group issued its third profit warning this year. And Sir Robert McAlpine announced a £37.7million pretax loss late last year.

Richard Threlfall, UK head of building and construction at KPMG, says: “All the main contractors are suffering because they bid close to the bone when they signed these fixed-price public contracts at the height of the recession. There’s an imbalance of supply and demand has led to the toptier contractors working on margins of just 1 per cent, which is unsustainable.” And the smaller firms that c l awe d t he i r w ay bac k complain that local councils are obstructive when it comes to planning permission. It is easier for local politicians to shrug and tell local residents that housing projects have been referred to appeal – leaving them with clean hands when it comes to unpopular decisions – further gumming up the works at a time when housing is desperately needed. All three political parties know they must do something. Last year only 115,000 new homes were built – half of the number actually required. Last October the government appointed ex-Goldman Sachs chief economist Jim O’Neill to head a think-tank looking at

how to regenerate our cities. O’Neill’s findings – due to be published on Wednesday – are understood to involve the creation of west-east train routes that will connect Manchester, Leeds, Sheffield and Liverpool. This will create a northern hub that will hopefully counterbalance the domination of London. C r e at i ng t h i s nor t he r n powerhouse w ill also stimulate new housing. Pr ime Minister Dav id Cameron has pledged to build 100,000 new homes ring-fenced for the under 40s. These starter homes will be 20 per cent cheaper by exempting them from a raft of taxes and by using brownfield land.

And a new Tory reform group, backed by Communities Secretary Eric Pickles, is pushing for a million new homes to be built over the next five years. Deputy Prime Minister Nick Clegg has thrown his weight behind a plan to create a string of garden cities between Oxford and Cambridge. This would deliver 50,000 new homes. Labour has announced that it wants the same thing, pledging to build 200,000 new homes each year. Sir Michael Lyons, former BBC chairman, is leading a review into housing policy and exploring ways to increase supply. Looking ahead, the internet of things promises a future

Labour proposes to enforce council house growth LABOUR will force local councils into creating “housing growth areas” if they fail to do it for themselves. At present, around a fifth of councils do not have a plan to meet local housing needs. Builders say councils stonewall them when it comes to granting planning permission. The Labour-commissioned Lyons Review into the future of housing hopes to uncork the bottleneck.

Councils would have beefed up powers to assemble land and ensure building takes place. Labour would set up a Help to Buy scheme underwriting loans to help small builders and fast-track planning on small sites. This would increase competition and

capacity in the house-building industry, says the report. Lyons claims the move could create 230,000 new jobs in construction, adding 1.2 per cent to GDP. Ed Miliband has already announced Labour plans to build 200,000 new homes a year. The Lyons report recommends councils control who gets to buy them. Half of new houses could be ring-fenced for local first-time buyers.


Thames bridge plans will boost new housing

where buildings will report on their maintenance in real time, and sensors will be embedded in every office block and public building, which will drive down costs and improve efficiency.

BUILDING four new river crossings in east London will help create more than 45,000 new homes, says a report. The Centre for London committee, chaired by Lord Adonis, has called for four new river crossings to be built in east London and Kent. The four new river crossings – built at Silvertown, Gallions Reach, Belvedere and close to the Dartford crossing – would unlock a “wave of regeneration”, according to the report. Around 27,000 new homes would be built in east London, and a further 20,000 in Essex and Kent, between now and 2031. At present there are 17 road crossings on the 20 miles of river west of Tower Bridge, but only three – the Blackwall and Rotherhithe tunnels and the aging Woolwich Ferry – to its east before the river reaches Dartford. The report argues development in east London has been stifled due to bad communications. Regeneration would also help create up to 60,000 jobs, boosting the economy in the southeast by £1billion annually.

Business Reporter · October 2014

Building Britain




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HS2: It’s more than just a railway CEO Simon Kirby on what HS2 means to the UK


S2 is a vital piece of integrated transport infrastructure that is long overdue. It is also the biggest and most exciting opportunity to help tackle some of the toughest challenges in our country. Piecemeal “make do and mend” simply will not work. The issues are serious and complex with long-term consequences. The step-change that HS2 offers is essential to make real progress in addressing the two-speed economy that is already taking root in the UK. HS2 will change our economic geography, providing high-speed connections between London, Manchester, Birmingham, Leeds, Nottingham and Sheffield and improving journey times further afield to Liverpool, Newcastle, Glasgow and Edinburgh as well as many other towns and cities. More cities will do business together, trade and compete as regional economic powerhouses. Capacity increases mean 20,000 more seats per hour. Long-distance passenger services using HS2 will create space for

local commuter and freight services. This doubles the number of shortdistance commuter seats and takes 500,000 lorries off our roads every year. Millions of people across the UK will have their job opportunities and life chances transformed. The construction of HS2 must be a catalyst for positive change, long before trains start running. The scale and duration of the build programme means we can create radical, long-lasting improvements in education, jobs, skills, training and opportunity. HS2 will employ thousands of people along the route, in our cities and across the country. Alongside senior engineers and technical specialists with world-class skills and decades of experience, we’ll need thousands of apprentices and new graduates. We’ll need people from dozens of different disciplines – people who have worked on the railways for their whole

lives, people who have spent their careers in other industries and people whose careers are yet to begin. We’ll recruit senior people with multiple qualifications and offer lifechanging opportunities to disadvantaged people through our partnerships with Job Centre Plus and third-sector organisations. The construction industry is not as diverse as it should be. HS2 can change that, recruiting people from a wide range of backgrounds and increasing the representation of women and ethnic minorities. Equality, diversity and inclusion are the smart ways to run a business, as well as the right way. We are all entitled to a world-class service and a project we can be truly proud of. To deliver that, we’ll need expertise from abroad – a lot of our international competitors have decades of experience in delivering high-speed rail.

However, it will also be the case that from across the UK, outstanding organisations and individuals will partner with us. From large multinationals to small domestic owner-managed businesses, all will need to have the same vision, ethos and approach. We will insist that our supply chain shares our ambition, innovation and creativity. Moreover, our partners will have strong ethics, robust training and education programmes alongside the rigorous prioritising of effective health and safety processes. So, the benefits of HS2 won’t just be felt by the commuters, business people and leisure travellers of the future, the benefits will be felt a long time before that, as we begin the process to deliver long-lasting benefits to the economy. That process starts now.

Business Reporter · October 2014


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Building Britain


Broadband access is the fourth utility, say tech experts By Tim Adler


K CONSTRUCTION plc expects to create nearly 200,000 new jobs over the next four years, with job creation in the industry having grown for 15 consecutive months, according to researcher Markit. But the building sector is facing a profound skills shortage as older skilled workers retire. Only 7,280 people completed a construction apprenticeship last year. Mark Clare, chief executive of Barratt Developments, has warned that a chronic lack of bricklayers in particular is causing a “real constraint” on construction. “The reality is that the whole industry needs more bricklayers and it needs more bricklayers now,” Clare said recently. “We can train only so many people and we are probably already flat out. My concern is that’s not enough and if others aren’t doing the same level of training, then we could get into some real difficulty.” Markit, which compiles the monthly purchasing supply index, says that a surge in the building sector has left companies struggling to meet demand. Tim Moore, senior economist at Markit, said that the broad-based upturn in construction demand has created a job boom, as construction companies look to replace capacity lost in the aftermath of the recession. Nearly 500,000 skilled professionals dropped out of the industry between 2008 and 2013. Brian Berry (below), chief executive of the Federation of Master Builders (FMB), agrees: “We’ve lost a huge amount of people and now there isn’t enough capacity in the sector to meet demand.” Hays Construction, the recruitment agency that supplies thousands of construction workers, says shortages are most acute in the housing sector – bricklayers, carpenters and site managers are especially prized. In the first three months of 2014, 61 per cent of contractors said they had trouble hiring bricklayers, up from 41 per cent in the previous quarter. The FMB says the answer is to relax the regulation

With UK construction powering its way out of the recession, the industry’s manpower shortage needs to be addressed more than ever

around builders taking on apprentices, and to encourage the big firms to do more. Right now, two thirds of apprentices are employed by micro companies consisting of less than five people. Red tape means only 18 per cent of FMB members train apprentices compared with 24 per cent two years ago. Duncan Bullimore, building development director at Hays, agrees that the sector is not investing enough in training, and that there is more big house builders could do. “It’s everybody’s responsibility – from the smallest subcontractor to have at least one

apprentice, right up to big multinationals training hundreds,” says Bullimore. Some contractors do finance degrees in construction management and other trade skills. “But if the current uplift continues, that’s not going to have any meaningful impact on the skills deficit,” says the recruitment expert. Bullimore also blames education for not encouraging school leavers to go into the building trade. In February 2014, 35 per cent of careers advisers said that construction was “unattractive” as a career option. In a week that has seen the UK Independence Party win its first parliamentary seat, partly on a ticket about paranoia over foreign workers,

Bullimore is sceptical about the effect that overseas labour has had on the building trade. He says that overseas tradesmen – the famous Polish plumbers – have only helped the local market by keeping wage inflation down, whereas spiralling wage costs would have been passed on to the general public. “Where would we be without them?” he asks. The problem is that most foreign tradesmen return home once they have earned enough money. And there is not a bottomless pool of foreign labour to replace them. “I suspect that the foreign carpenters and tradespeople that we have seen are the last of them – there aren’t any more queuing to come over,” he says.

BUILDERS need to incorporate broadband when planning housing developments, say technology experts. London mayor Boris Johnson announced plans this month for all office blocks to carry a broadband connectivity rating. Estate agent RightMove already lists broadband speeds when adver t i si ng com merc ia l property. Incorporating broadband ultimately improves a building’s sale value, says cable operator Virgin Media. Too of ten broadband is added as an afterthought. Virgin Media has agreements in place with homebuilders such as Persimmon about incorporating fibre broadband at the planning stage. P a u l B u t t e r y, c h i e f customer technology and networks officer, Virgin Media, says: “Hav i ng super fast broadband adds value to a hou se. Work i ng w it h developers from the outset is only to be encouraged.” Anthony Impey of broadband prov ider Opt im it y says: “Property developers have a big part to play. The landlord needs to t h i n k about i nter net connectivity in the same way it would about electricity and water right from the start.” Recent London off ice de ve lopme nt s t h at h ad broadband built in from the start include the Heron Tower and Here East, the renamed Olympic broadcast centre in east London. The government plans to offer high-speed internet access to 95 per cent of UK homes and businesses by 2017. Currently t h e U K r a n k s 11t h in the EU when it comes to 24Mbps superfast broadband access and in the bottom six when it comes to offering anything over 100Mbps. However, critics say that the government’s definition of “superfast” is a paltry 24Mbps compared with South Korea’s 1Gbps. The London mayor wants 99 per cent of homes and businesses in the capital to have access to superfast broadband by 2018.

Business Reporter · October 2014


Building Britain


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Garden cities Development held back by planning set to rules, claims HBF bloom again

By Tim Adler

ONE OF the biggest problems facing home building is an obstructive planning network and lack of access to land, says property consultancy Knight Frank. “Releasing more public land is the biggest problem facing the industry,” says Grainne Gilmore, head of UK residential research, Knight Frank. The planning system is the biggest constraint on building, says the Home Builders Federation (HBF). It says that only around 115,000 homes were built in England last year, against a recognised need for around 230,000. “Because demand is up, builders want to get onto new sites quickly and the planning system is holding them back,” says the HBF. “The planning system has always been a constant brake. It’s a pressure point at a time the government and industry are both looking for more houses to be built.” Builders allege that some local authorities are deliberately gumming up the works when it comes to granting planning permission. It is easier for them to refuse planning permission and wait for developers to go to appeal, builders say. That way planning departments can play to the gallery and say they tried to block unpopular local developments. This has been a growing problem for the past three or four years, say builders – the HBF estimates that only 20 per cent of authorities, 65 in total, have an exact up-to-date plan in place. Another 40 per cent have looser plans, with the remaining 40 per cent having no plans in place at all. The Local Government Authority, which represents planning departments, disputes this. “The latest figures show that more than three-quarters of councils

have a published local plan,” says Cllr Peter Box, c ha i r of t he LGA’s Environment, Economy, Housing and Transport board. HBF says local authority planning departments are overstretched, and it is much easier for a planning committee to turn down developments. That way, the local authority can justify to residents that they are not in the pockets of big business while protecting their interests. “Having somebody else to blame is a powerful tool for local politicians,” says HBF planning director Andrew Whitaker. So how do property developers know what and where to build if a local authority plays its cards so close to its chest? Whitaker believes this is guesswork. Developers can be granted outline planning permission but there is still an average delay of between 18 months and t wo years bet ween per m ission being g ra nted a nd work actually beginning. HBF says t hat 150,000 out line planning per missions approved are still waiting for work to begin. This, claims the HBF, is because planning departments impose all sorts of preconditions before foundations can be laid. It believes many of these preconditions are unnecessary and onerous. “We’re trying to encourage more local authorities to be more liberal,” says Whitaker. Local authorities are starting to listen. In 2011, 115,000 new homes were given outline planning permission. Last year that went up to 200,000. “Planning approvals have increased and 88 per cent of planning applications were granted permission last year, which was the highest rate in 10 years,” says Box. “Things are looking up,” says Gilmore “But we’re still a way from where we should be in terms of housing.”

The Edwardian concept of garden cities has been re-engineered into a modern solution to the housing crisis. Tim Adler reports


EPUTY Prime Minister Nick Clegg has pledged to develop a string of new garden cities between Oxford and Cambridge. Speaking at this month’s Liberal Democrat conference, Clegg promised to deliver 50,000 new homes through building 10 garden cities. Clegg told delegates: “Garden cities are a vital cornerstone of our plan to boost house building to 300,000 homes a year – enough to meet demand and keep prices in reach – while still protecting our precious green space and preventing urban sprawl.” Recent governments have talked up the idea of garden cities as a solution to Britain’s housing shortage, but progress has been slow. It has been hard to identify uncontroversial sites. First proposed in 1898, garden cities – cities that are built around nature and maintain green spaces for the benefit of residents – are back in vogue. They have been revived as the solution for England’s acute housing shortage problem. The Home Builders Federation says that last year 115,000 new homes were built, as opposed to the 230,000 needed. Last month, the second biggest economics prize after

David Rudlin’s plans for the conceptual garden city of Uxcester won this year’s Wolfson Economic Prize

the Nobel Prize was won by Manchester-based urban planner David Rudlin for his essay on garden cities. Rudlin has called for the creation of 40 garden cities across England providing new homes for 150,000 people over the next three decades. A total of 3.5 million new homes would be built. Unlike the Liberal Democrat proposal, these garden cities would be built onto the side of existing towns such as Northampton, Norwich, Rugby, Reading and Stafford. Two towns are already in talks with Rudlin’s design consultancy Urbed about putting flesh on his Wolfson Economics Prize proposals. The consultancy plans to publish two more reports within a few months. Rudlin says: “The key thing about garden cities is that they have a good press, and a very good public reaction.” Three quarters of Britons think that building new garden cities is the right solution to Britain’s housing problem, according to a Populus survey published in June. Rudlin’s vision is to build garden suburbs onto existing towns, to act as its “new lungs”. The attraction of grafting garden cities onto existing towns is that they already have infrastructure and amenities in place. His new garden cities would need their own railway station, theatre and other facilities, and sites such as Canterbury, Harrogate and Stratford-upon-Avon already have these in place. Says Rudlin: “The problem with new towns such as Milton Keynes is that they are really hard to build from scratch. There just isn’t enough value in the houses when it comes to building the facilities you need.”

Business Reporter · October 2014


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Building Britain


Another view Tim Adler

Urbed estimates it would cost £1.5billion to buy the land needed for 40 garden cities. The free-market value of this land would be £6billion, so the government would only compensate landowners with a percentage of the market value – either through compulsory purchase order or some other method. It is how Milton Keynes was financed back in the Sixties or, more recently, the Queen Elizabeth Olympic Park in east London. You can imagine the howls of outrage. This means the government would in effect have liberated £4billion to build the garden cities. But critics of garden cities say they will just become soulless commuter towns tearing up precious countryside. Instead, we need to concentrate on redeveloping existing brownfield sites – industrial sites that are either polluted or abandoned. They dismiss garden cities as just more low-density urban sprawl. Rudlin admits that people get more resistant to the idea of garden cites once they are being built in their backyard. The no-go area for any politician hoping to be re-elected is building on sacred green-belt land. Rudlin says: “Politicians really don’t like talking about the green belt. Building on green belt is difficult for them to address when you have to deal with constituents. “All three political parties are desperate for more housing but none of them wants to stick their neck out when it comes to the green belt.” Given its attractiveness as an idea, why is the garden city coming into vogue now? The answer, says Town and Country Planning Agency

“Garden cities are a vital cornerstone of our plan to boost house building to 300,000 homes a year, while still protecting our precious green space and preventing urban sprawl” – Nick Clegg

chief executive Kate Henderson, is that garden cities went out of fashion because a ravaged Britain needed to build homes fast. With a post-war public very much attuned to the idea of wholesale reconstruction, the New Towns Act of 1946 enabled towns such as Milton Keynes and Stevenage to be built quickly. Plus, the rise of the motor car was seen as inexorable. These days, smaller garden cities with access to green space, as opposed to the Brutalist architecture of the Sixties, are on the ascendant. The problem is that they are expensive to build. Building garden city houses that are still going to be attractive in 100 years’ time goes against the grain of much modern building, which throws up high-rises quickly so developers can get their money back. A garden city is much more of a longer-term project that requires time to bed down, says Henderson. “It’s politically challenging to support projects that need to be delivered across several political cycles,” Henderson explains. “That’s why it’s important to have all three political parties on board. “Cross-party support is vital if we want to provide garden cities in the long term. The political reaction has been very positive, though. All three political leaders support the garden cities but we need to see how they could be delivered, and the role of the government in supporting that.” Rudlin agrees: “The hope is that somebody is going to grasp the nettle and take this forward, especially as we have an election coming up.”

“You’ll have to queue up for when the doors open. It’ll be chock-a-block,” the estate agent told me. When I spluttered that we were talking about flats that were selling for up to one million pounds and that I was not going to be bounced into paying a deposit there and then, the agent told me that most flats were bought the same day they came onto the market. Foreign investors were buying them up “off plan” – while they were still a slick estate agent’s PowerPoint presentation – using them purely as real-life Monopoly counters. “It’s your choice,” he yawned. Anybody driving through the capital will have noticed the vast numbers of luxury apartments – and they’re always “luxury” – being built. EC Harris, the property consultancy, estimates that £60billion worth of luxury homes will be built in London over the coming decade – a 25 per cent increase year on year. More than one in five house sales in London’s most exclusive areas are already going to wealthy foreign buyers, according to the Department for Business, Innovation and Skills. Yet many of these are sitting empty, using up valuable land that could otherwise have housed people. Labour MP Sadiq Khan says more than 60,000 dwellings have nobody at home. This off-plan buying inflates house prices, pushing ordinary Londoners out of the capital. Foreign investors from China and the Gulf States bring nothing to the community. Land that could provide purely social housing is instead sold to rapacious property developers to build Off-plan more identikit urban dwellings – buying is and greedy estate pushing agents with all the morals of the ordinary investment bankers Londoners who make up the rest of their clients. out of the The Liberal capital Democrat proposal to subject homes worth more than £2million to a 1 per cent annual levy should be applauded. It will help pop the capital’s housing bubble. London prices rose by 20 per cent last year. And for a £2.5million luxury flat, all we’re talking about is a paltry levy of £5,000 a year. If we do nothing to stop London property being bought purely as an investment, say hello to a London skyline silhouetted with mostly empty skyscrapers – a nightmare straight out of JG Ballard.

Business Reporter · October 2014


Building Britain

Tim Adler


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The big interview Jim O’Neill

Jim O’Neill, the ex-Goldman Sachs economist leading the government review in how to revitalise English cities, wants Manchester and Liverpool to create a northern powerhouse. This will create a huge opportunity for the construction – but only if we break the monopoly of big builders, he says.


OR JIM O’NEILL, the mission to regenerate Britain’s cities is deeply personal. He wants to see other kids growing up in the north of England being given the same chances he was. O’Neill, 57, went to state school and provincial universities before ascending to become chief economist of Goldman Sachs. Not for him the Tory cabinet route of Eton and Oxford. “Don’t let the big shiny city centres of Manchester and Leeds give you the wrong impression – there’s still plenty of poverty in the north. If anything, it’s got even worse,” he tells me. O’Neill grew up in Gatley on the south Manchester border with Cheshire. The road he lived on was split down the middle – one half was in posh Cheshire and the other in gritty Manchester. “I used to be called the Gatley snob,” he shrugs. Graduating from Sheffield University, he did his PhD at Surrey University before eventually joining Goldman Sachs in 1997. He then became chief economist at the world’s second-largest investment bank and was finally promoted to chairman of the asset management division. How lucky he has been was underlined during a recent visit to his old primary school in Wythenshawe, the run-down suburb of Manchester where TV’s Shameless is filmed. He found himself talking to a teaching assistant in the playground who’d been there at the same time. “Whatever happened to those lads I used to knock about with?” he asked. All three of them were dead, she replied, including one who committed suicide. It was, he says quietly, “a very tough neighbourhood. One of the most deprived neighbourhoods in Britain”. O’Neill was appointed to lead the government’s review of how to regenerate Britain’s cities in October 2013. Sitting alongside him are academics, economists and business people. O’Neill is reluctant to talk about the report in detail ahead of this Wednesday’s unveiling. However, he was happy to share some headlines with Business Reporter. His chief recommendation is that Manchester, Sheffield and Leeds need to be connected by fast train services to create a powerhouse business hub in the north. On their own, these cities are not big enough, but joined together the combined population of Manchester, Sheffield, Liverpool and Leeds would be 2.3 million – still more than a quarter of the size of London. O’Neill loves an acronym. It was he who coined “BRIC” to describe the vibrant young economies of Brazil, Russia, India and China, which is where growth is going to come from in

Build more powe the 21st century. For this report he has coined the acronym “Manpool” to describe a joined-up Manchester and Liverpool – an idea that horrified local politicians when he first suggested it. O’Neill is encouraged by how the government has got behind his idea. Back in June, Chancellor George Osborne supported the idea of creating a “northern global powerhouse” – extending HS3 so that it connects Manchester and Leeds. He told the BBC that better road and rail links across northern England would allow cites from Liverpool to Hull “to take on the world”, but that individual cities were “collectively not strong enough”. O’Neill says: “I’m very pleased that the Chancellor has embraced a lot of our ideas. I believe what we’ve proposed will be so radical it will impact the country’s growth trend.” Personally, O’Neill is sceptical that the HS2 rail link between Birmingham and London will do anything except encourage more commuters to the capital. Ditto the HS3 spurs connecting Manchester and Leeds to London.

Life and times of Jim O’Neill • Born March 17, 1957, in Manchester. His father was a postman. • He grew up in Gatley, Stockport, and attended Burnage Comprehensive, Sheffield University and got his PhD at Surrey University. • Joined Goldman Sachs in 1995 after roles at Swiss Bank and Bank of America. Promoted to chief economist in 2001, then chairman of Goldman Sachs Asset Management in 2010. Retired last year. • A Manchester United fan, he led the Red Knights group of businessmen who attempted to wrest control of the club from the Glazer family. Its failure, he says, “is my single biggest regret”.

What has surprised him is how offhand Labour has been to his ideas. The north is after all, he says, Labour’s heartland. “To my surprise, the Labour Party doesn’t seem focused on it,” he remarks. “I say that having spent time with most of the leadership. If somebody had asked me a year ago who would be most amenable to northern regeneration, I would have said the Labour Party.” The Conservatives have got behind another of O’Neill’s recommendations – devolving power to the big cities so they can control their own destinies. Cities such as Birmingham were much more independent in the last century. And the population of London is greater than those of Scotland and Wales combined. In many ways, it ’s a return to the R e n a i s s a nc e ide a of t he city-state. O’Neill admits punching the air when he saw David Cameron standing outside Downing Street the

Business Reporter · October 2014


Building Britain

Creating this super hub will result in a lot of housing. It could be a huge opportunity for the building industry. You’ve got to create incentives for people to want to build

Portrait: Andras Rac

er in the north morning after the Scottish referendum talking about handing over more power to cities. Another plank of the report is incentivising graduates from northern universities such as Manchester and Leeds to stay on in the area, receiving grants for establishing new businesses, rather than join the commuter drain to London. And the Chancellor has again thrown his weight behind establishing a world-class medical research facility in the north along the lines of the Francis Crick Institute in London. O’Neill’s message to UK Construction plc is clear. “Creating this super hub will of course create a lot of housing. It could be a huge opportunity for the building industry,” he says. “My first enquiry from business types is, ‘You’d better keep us informed about this because there might be some great business opportunities.’” However, O’Neill says that contracts for big construction projects are too often handed out to the same few companies. “There’s monopoly control of a lot of large builders. You’ve got to break that and create

Northern cities such as Leeds (below) and Manchester should form a “super hub” to grow local business, says O’Neill

incentives for people to want to build. I’m very familiar with the idea of cities driving growth,” he says. And this northern regeneration won’t just benefit builders but everybody else in the economy, he argues. “If anything, Wythenshawe has got even poorer – it’s got worse. Central Manchester is fantastic. That’s one of the issues I’m eager to remind my fellow commissioners about – ultimately with all these urban cities, London included, it’s great to have these fancy shining city centres with a lot of things going on, but you must engage with those people in those communities a mile or so outside the centre. In Manchester you walk a mile in any direction and it’s very poor. And that’s true in Liverpool, Leeds and London.” A thoughtful, self-deprecating man who reminded me of the actor Robert Lindsay, O’Neill appreciates just how far he has come. “I’ve been very lucky in my life,” he concludes. “Especially when I see that half the kids I used to hang out with are dead.”


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Where the evidence of regeneration speaks for itself


he latest figures from the Office for National Statistics reveals Britain’s economy is finally picking up and is officially bigger than it was before the crash in 2008. During this time, construction and manufacturing has been significantly impacted – however, a key element which has nurtured growth for some key players – such as Sika, which has an annual global turnover of £3.3billion – has been the continued investment in refurbishing and regenerating Britain’s existing building stock. Sika Limited is the UK subsidiary of the worldwide Sika Group, providing technologically advanced solutions for concrete production, waterproofing, roofing, flooring, sealing, bonding, grouting, reinforcing, structural repairs and protection, as well as innovations in steel and glass façade bonding. Sika has long been a pioneer in innovations designed to meet manufacturing and construction challenges, with research and development centres based in the UK, and is supported by a long list of completed projects around the globe. Having successfully weathered the economic storm, Sika continues to grow and develop by helping clients in the construction industry solve the unique problems they face on a daily basis – whether that’s ensuring a project comes in on time and under budget or providing a bespoke solution to meet aesthetic or final-use requirements. Sika is located across the UK and Ireland, with a network of technical support staff nationwide. With more than 100 years’ experience in supplying products for construction, Sika is confident of providing the perfect solution, no matter the requirement. With involvement in a wide range of projects, from primary schools to huge developments such as the “Walkie Talkie” Tower (below), the evidence speaks for itself. To find out how Sika could help you, or for more information, visit

Business Reporter · October 2014

Building Britain




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We’ve got you covered!

As people demand more from living and working spaces, there is a key role for paints and coatings


n the customer-led 21st century, where the consumer is king and where supply follows demand, it is more important than ever for businesses that are responsible for how buildings look and feel to take into account these changing needs. Customers now expect far more from where they work and live from a technological and cosmetic point of view, and it is up to forwardthinking businesses to respond to that. Alistair McAuley, board director at AkzoNobel Decorative Paints, UK & Ireland, is clear about the challenges facing the paints and coatings industry. “People these days, whether at work or at home, expect more from their living spaces and the challenge for construction now is how we adapt to that,” he says. “We work closely with the construction sector and all stakeholders within the supply chain. “Through working with these partners, we can help the building industry positively respond to some of the challenges they face – saving money, time and reducing environmental costs – while also creating better and brighter living spaces that meet our changing needs.” Although the UK is slowly but safely emerging from a recession, there are still huge strains on the construction industry as businesses everywhere try to keep costs under control while being aware of government-led demands on sustainability and the impact of ever-changing technology. As McAuley says: “Decorative paints can play a key role in easing this pressure and help provide better and brighter spaces.” AkzoNobel’s paints and finishes – which include Dulux Trade, Sikkens, Cuprinol and a new brand Armstead Trade – have been used in some of the most prestigious construction projects in recent years: the Gherkin, the Shard and Wembley Stadium. Key recent public sector contracts have included the new Glasgow Southern General Hospital, Glasgow SSE Hydro Arena and student accommodation at Exeter University. McAuley explains: “What these projects have in common is that our offering is more effective the earlier we are brought into the process. It can be easy for paint finishes to become an afterthought, but really they need to be embedded in the project right from the beginning. If we are considered as early as possible in the design process then we can work with them to cost-effectively create a final space that works for the end user. “And it’s not just for the person who uses the building first – we have to think about how it will function in 10 or 20 years’ time, so working alongside facilities management companies in terms of redecoration.” To help the construction sector confront these new challenges, AkzoNobel works as an

integrated partner throughout the construction process, working with specifiers – the people who specify what products are going into a building – from the start to allow developers to integrate coatings and design that can enhance the building in an efficient and sustainable way. This can help create better and brighter buildings, where occupants can thrive. For example, the Shard may look like it’s entirely made of glass from the outside, but AkzoNobel was brought in early to ensure highly durable exterior coatings were used. On a public sector level, Derby City’s BREEAM “Excellent” refurbished office (pictured below) will remain bright for longer thanks to AkzoNobel’s highly durable interior coatings.

While builders once only consulted paint manufacturers on colour and availability, today the conversations are much more involved, with discussions starting early – including a focus on sustainability. To meet sustainability targets, AkzoNobel works closely with customers across the construction industry to help them exceed the targets set by government, whether this is through new product innovation or initiatives to cut wastage and reduce costs. Westfield’s winning bid to create a huge shopping centre in east London was helped by the sustainability plan AkzoNobel delivered. It placed a mobile paint store on site during construction to reduce distribution mileage, and recycled paint cans to reduce waste and associated costs. AkzoNobel has also responded directly to the challenge of delivering more construction projects in a shorter space of time. McAuley adds: “Given that we spend 90 per cent of our time indoors, it’s important that we make our living spaces better and brighter: smarter, if you like. The question is how do we make these spaces smarter while increasing the efficiency of the work?” One of the answers is quicker-drying paint. “Since 2010 the industry has moved from traditional solvent-based paint to new water-based paints that

actually perform better and can be applied quicker,” explains McAuley. “Brushes can now be washed in water and the paint dries quicker. Dulux has been working hard to have virtually zero volatile organic compounds in its paint.” The challenge has been convincing tradesmen that the new generation of more sustainable materials perform better, although AkzoNobel is making real progress with its new quick-dry range. The company’s R&D specialists have also developed products that help customers respond to ongoing challenges, including antibacterial paint that helps safeguard hospital patients and staff against bacteria. Another innovation is Dulux Light + Space, a paint developed especially for dark communal spaces, whether they are in dingy hallways at home, dimly lit offices or social housing stairwells. This paint enhances natural light levels in rooms, thereby reducing the need for artificial light and reducing energy bills. Collaborating with schools is also right at the top of the agenda. It is known that certain colours can affect mood, which is why space scientists spend so long on deciding colours for spacecraft interiors. Similarly, AkzoNobel works with schools to choose colours that can improve the environment for pupils. McAuley concludes: “Our experience shows us that paints and coatings have a central role to play in helping the construction industry overcome resource, efficiency and sustainability challenges, whilst at the same time creating beautiful and functional spaces that benefit our customers. Our ongoing dialogue with our partners in the industry will allow us to continue helping them confront new, emerging challenges long into the future.” Alistair McAuley (left) is board director at AkzoNobelDecorative Paints UK & Ireland 0333 222 70 70

Business Reporter · October 2014


Building Britain

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Inspector Dogberry

Speaking of bricks, Hays Recruitment’s construction industry director Duncan Bullimore tells me that some bricklayers are earning up to £1,000 a week. The building industry is facing an extreme shortage of bricklayers, along with

By Matt Smith, web editor

National stocks

last year. House builders

factories in Worcestershire and

electricians, plumbers

The UK Construction Blog

of bricks were down by

are stockpiling, which is

Surrey and plans to increase

and especially quantity

24 per cent as of May, according to the Carter Jonas estate agency, using

making the situation worse. “It’s true. Bricks were in short supply in the early part

brick capacity by 200

surveyors, says

million. Manufacturers


made an extra 500

This means a brickie can

figures from the Department

of last year, but manufacturers are

million bricks this

for Business, Innovation & Skills.

replenishing stock levels,” Simon

year – the average

earn up to

Hay, exasperated CEO of the Brick

wait is six weeks for

£50,000 a

wage bill for bricklayers, has gone

Development Association, tells me.

regular bricks, says

year. Sounds

up by 30 per cent over the past

“It may be true that certain bricks

Hays. He adds that

good to me

12 months, according to property

are taking a long time to order

builders are ordering

– Dogberry

management company Turner &

but factories are reopening to

from different

may well be

Townsend. MD Jon White says the

accommodate demand.”

suppliers then


cancelling once they

a new career

get the bricks they need.


The cost of bricks, as well as the

waiting time for bricks stands at 40

Wienerberger, the Austrian

weeks – up from 10 weeks this time

brick manufacturer, is reactivating

Are wooden skyscrapers going to be the next big thing? Vancouver-based architect Michael Green thinks the sky’s the limit for wood buildings, apparently. He’s drawn up plans for a 30-storey wooden skyscraper in the city’s downtown. Green’s vision would be the world’s tallest wooden building. His eco-friendly “plyscraper” would be built from layers of low-grade softwood being glued together to create timber panels. Meanwhile, Skidmore, Owings & Merrill, the world-class architect behind the Burj Khalifa and One World Trade Center, is considering using wood for high-rise buildings. And in China architects Arup are teaching the Chinese about the benefits of high-rise wooden skyscrapers. I can’t help cocking my leg at the thought of what’s basically a 300-foot high tree.


Twitter: @dogberryTweets


This long-running blog covers all aspects of construction and architectural design in the UK, from education and schemes to encourage young people to enter careers in the industry to news on major projects in progress. Browse the recent posts for news on Tottenham Hotspur’s new £400million stadium.

Construction Industry Training Board Blog search/?t=Blog

More power to your elbow Devon-based Powered Now has

potential customers out there.

raised £585,000 to help develop an

Given that Powered Now was only

app for builders to generate quotes

looking to raise £350,000 through

and invoices.

crowdsourcing shows how popular the

Co-founder Chris Barling tells me

idea has been with investors. A total of

building is the last business sector to

165 people invested for around 30 per

be disrupted by technology. “One

cent of the company, with Powered

of the things tradesmen hate doing is

Now reaching its funding target within

paperwork. By definition they’re much

12 days of going live.

For all things training-related look no further than the CITB’s blog, which takes a broad look at schemes in the industry and features individual case studies focusing on promising young people in construction. Articles also include insight from the CITB’s

better with their hands than they are

experts, industry journalists and business leaders from the sector.

Construction Industry Council Blog The Construction Industry Council, which represents professional bodies, research organisations and specialist associations in the sector, runs this blog, featuring in-depth articles on various aspects of construction. Recent posts cover topics including the use of trees in urban developments and a celebration of women in the industry.

Building Design Expert blog

filling out forms,” he says. The app runs on iPads and iPhones, with an Android version in beta. It costs £5 a month and Powered Now hopes to have 1,000 tradespeople signed up by Christmas. More than 600 have signed up already. Barling, who previously invested in what is now Amazon Instant Video, says there are nearly a million

PlanGrid (FREE – iOS)

Collaborate on construction projects with this app for iPhone and iPad, which allows contractors and architects to share information and photos.

Construction Calculator (FREE – Android)

Designed both by and for construction workers, this app functions as a calculator for working in feet, inches and other units of measurement.

If you are seeking inspiration for your next project, the Building Design expert blog could provide some ideas. The site focuses on the specifics of construction, including paintwork, window technology and materials, and ways to save money on a building site to help bring the cost of construction down.

Making the most of Building Information Modelling


ith many stakeholders involved in a typical construction project, collaboration is essential for efficient working. Yet, in the 10 years I have worked in the industry, the typical approach in many projects has been “trust no one and keep everything to yourself”. This way of thinking is undoubtedly the biggest barrier to undertaking the change necessary to take our industry forward. However, change is afoot. Taking a lead from the government client, Solibri’s clients (including many of the industry’s biggest names) are adopting a new way of working called Building Information Modelling (BIM). Supported by technology, the BIM process is different in many ways to typical construction methodology, as it is based on trust and collaboration. Although BIM technology is new, the process is not. It could be argued

that the pyramids were built using BIM, as everyone involved was working in the same place at the same time, facilitating collaboration. If we think of a building project as a jigsaw puzzle, childhood knowledge dictates that the best way to make the puzzle is to start with the picture and cut out the pieces. In construction, we start by creating the pieces and then making sure they fit. BIM facilitates this design process, while at the same time adding vast amounts of information and knowledge to a computed virtual model of the building. Accuracy of this data is of fundamental importa nce – otherwise we are magnifying rather than solving a problem. Solibri “quality checks”. It has been likened to a BIM “spell-checker”. By performing multiple validation checks in a single application, Solibri is also thought of as

a “Swiss army knife”. The number of Solibri clients is growing rapidly and is set to continue as a wider user base capitalises on the inevitable change that is inherent, as software continues its move to cloud-based application and revenue-based purchase. David Jellings is MD, Solibri UK 0844 854 9250


12 · Business Reporter · October 2014


INSIDE TRACK Construction’s digital future has technology at its heart

Building for success: Investing in a culture of care


n a global business as competitive as construction, a competent and skilled workforce gives you a competitive edge. Construction companies ask me why it is so important to have a workforce that is trained to the highest safety standards. Silly health and safety rules are often the butt of tabloid news stories. Health and safety is often thought of as restrictive and just an added cost. The best construction companies understand that staff trained in health and safety improve site efficiency – and also make their companies more attractive to work for from an employee’s point of view. For the employer there is the comfort of knowing that an employee has essential awareness of working safely on site. On-site competence also avoids potentially ruinous court cases – which reassures investors. IOSH is the chartered body for health and safety professionals. With more than 44,000 members in 120 countries, we’re the world’s biggest professional health and safety organisation. Around one third of our members are in the construction industry. We know from our

own research that manufacturing and construction are still the biggest areas for demand – generic training for non-health and safety professionals or specific training for the profession is what we do. Skills and capability lead to a safer workforce and those skills become internationally portable. Certificated training is something that people can carry with them wherever they work. This is an advantage, especially with growth in the Gulf states, India, Nigeria, Turkey and Russia, which are showing huge demand supporting housing infrastructure. We believe that training is relevant to everyone. Last year alone, more than 150,000 people were trained to our standards. Forward-thinking organisations know that investing in a culture of care brings advanced performance through reputation, resilience and results. Some of the biggest construction companies in the world follow these developments – all of the top 20 construction companies in the UK and more than half of the top 30 global construction companies have members of IOSH working within them at


senior level. These organisations are quite clearly taking health and safety to the heart of their organisation. As an organisation, our vision is a world of work that is safe, healthy and sustainable – to achieve this we work with a network of training partners who operate across the world to ensure our UK framework continues to be one of the most sought after and trusted. Our training network extends across 84 countries. The network has 1,850 training centres including construction companies such as Balfour Beatty and Bovis Homes. Earlier this month, the Construction Skills Certification Scheme (CSCS) recognised our one-day Working safely course as an equivalent to a Level 1 Award in health and safety in a construction environment. This means anybody who completes Working Safely can apply for a CSCS green labourer card – the card site managers check to ensure labourer competence on site. Our UK framework provides opportunities for UK building firms who carry these standards, and UK health and safety standards remain the envy of the world. Jan Chmiel (left) is CEO of IOSH

n contrast to the tough trading conditions of the past few years, the advent of Building Information Modelling (BIM) has been a welcome development for the UK construction industry. The benefits of the BIM process are today too numerous, and too well documented to ignore – greater productivity, improved safety and quality, better collaboration, enhanced programme performance, more satisfied clients, and more. With the majority of the world’s current construction spend and forecast growth originating in emerging markets, and increasing demand there for firms that “get” BIM, there is also a huge potential opportunity for the UK construction industry, already ahead of many in terms of BIM expertise, to secure lucrative export work. But the digital world isn’t standing still. Just as the technology which enables the BIM process is transforming the industry today, a new generation of digital trends are poised to do likewise tomorrow. Increasingly, the success of individual contractors will be linked to their ability to deploy these digital developments. Trends such as big data, cloud, 3D printing, the internet of things, digital reality, crowdsourcing, crowdfunding, or algorithmic

design, will change the way in which the industry plans, finances, designs, builds and manages tomorrow’s built environment. In particular they will open the door to radically new ways of tackling the really big issues of urbanisation, energy, skills and sustainability. If today the industry uses digital models for individual projects, then tomorrow expect it to model whole cities as integrated ecosystems – letting technology take the strain of matching population patterns to transport infrastructure, projected workloads to digital apprenticeships, CO2 levels to green-space offsetting, and the urban aspirations of communities to crowd funded investors. Exciting times lie ahead for the UK construction industry, and technology will be at its heart. Dominic Thasarathar, construction thought leader, Autodesk

Business Reporter · October 2014 · 13


British concrete and cement producer Hope Construction Materials has set up its own apprenticeship academy to recruit and develop the engineers and technicians of the future. Pictured left to right are Matt Richardson, Henry Wilde and Daniel Repton, the latest apprentices to join Hope’s 900-strong national workforce. With almost 180 sites across England Scotland and Wales, the £300million turnover


he demolition business, probably more than any other sector of British industry, has made enormous strides in efficiency, innovation, safety and sustainability in recent years. This is largely due to the efforts of the people who work at the centre of the industry, and who have taken up the challenges that modern-day demolition projects now demand. It used to be that perhaps just 5 per cent of construction costs were earmarked for demolition. In many cases this has now at least doubled, as the upper tier of demolition contractors expand their scope and take on more of the builders’ work. For a company like John F Hunt, the average cost per contract was between £2-3million just three years ago, but today, post-recession, that has doubled, as larger and more extensive schemes have hit the market and the company’s compass of operation has increased. Established in 1982, John F Hunt Demolition has grown to become one of the UK’s largest demolition companies. It works with developers, industrialists, contractors and local authorities throughout the private and public sectors, and is at the forefront of new thinking within the industry. Increasingly, companies are being asked not only to demolish buildings but to prepare the ground before construction can commence. John F Hunt offers a broad spectrum of services including ground remediation, piling, infrastructure and deepbasement construction works. Andy Salter, Managing Director of John F Hunt Demolition, explains: “Clients are continually looking for best value from us. We have addressed this by focusing on innovation in engineering and in the methodology we adopt. Also, increasing the sphere of our operations and becoming more construction-orientated has allowed us to offer clients

company is supplying the core products – cement, ready-mixed concrete, limestone, sand and gravel – to meet the surge in demand from UK housebuilders and construction firms. Simultaneously, Hope is flying the flag for British manufacturing, indigenous raw materials and home-grown talent.


High hopes for new talent

Setting sights on another European record

T It’s the taking apart that counts: The demolition business is looking good significant cost and programme advantages.” Demolition, along with the rest of UK construction plc, faces stiff competition to recruit the best talent; good people are scarce in this booming market. From machine operators to supervisors, project managers and surveyors, quality people are in short supply. Salter continues: “Some years ago we took a conscious decision to improve the calibre of people we recruit. John F Hunt is now offer engineering apprenticeships in its workshops, and sponsors talented young people through university. We also embarked on an extensive scheme to expand the knowledge of our existing staff in related fields, especially that of Health, Safety and Quality Systems management.” This has obviously paid dividends, as the company now boasts one of the best staff retention rates in its sector. John Hall, John F Hunt Group CEO, taking an overview on the business adds:

“Customers in the plant-hire sector are no longer willing to tolerate noisy, out-of-date and inefficient equipment. Accordingly, we decided to initiate a structured replacement policy, taking advantage of the exceptionally low interest rates, and invested heavily in the most silent, security assured and environmentally friendly plant on the market.” He says: “Now, with the recession well behind us we are running exceptional utilisation rates, as demand for this new generation of machine increases.” Another change Hall has noticed is a growing preference for robotics. “In the demolition sector we have seen an increasing demand for robotic machines. This has been brought about not only by pressure from health and safety, but a general desire of the industry to become more cost-efficient and improve working practice in general. However, our hire business has seen an excellent upturn from the specialist tunnelling sector off the back of Crossrail,

where zero emissions are so critical. Therefore as a consequence, we have virtually doubled our fleet of robotic demolition machines over the last 18 months.” The company currently employs more than 450 people across its Demolition, Plant Hire and Asbestos Consultancy operations. It is at the heart of the London construction boom, and is one of many businesses to be benefiting from the insatiable appetite of Far East investors for London Real Estate. Hall concludes: “I am often asked, if as a business we are now ‘hiking up our rates’ and the answer is always a resounding ‘No’. Our current working margin is exactly what it was during the recession. However what we are trying to do is work in a more planned and efficient manner, not taking the unnecessary risks that have traditionally seen so many Demolition and Plant Hire Contractors fail in the past”

he UK construction and off-highway equipment industry is worth around £11billion to the UK economy and, with infrastructure projects such as Crossrail and HS2, this figure is set to grow considerably as the demand for construction machinery reaches new levels. Hyundai Heavy Industries Europe has been increasing its market share in the UK year-on-year since its construction equipment first arrived in the UK from South Korea some 15 years ago. Hyundai is now the fastest growing construction equipment company in the UK and, last month, Hyundai reported machines released to the UK market reached 955 units in one year (to date) – another European record broken by the company. HHIE’s sales director construction equipment, Alain Worp, says: “For next year and beyond, the primary target remains to further increase all European market shares in all machine

segments we are covering, especially in the key countries of the UK, Germany and France, which at the moment represent about 70 per cent of the total European potential. “Hyundai is a growing brand all over Europe, but we have done especially well in the UK. The challenge ahead is to continue this growth path with our existing Hyundai dealers in the UK and strengthen and grow our dealer network throughout Europe and enhance and widen our product portfolio.” Worp concludes: “Hyundai’s key strengths lie in the quality of its machines, our significant investment in R&D, innovation and a highly competitive price, which our competitors are unable to match.” Hyundai says its distribution and logistics chain has been fine-tuned to meet the demand for its machines. Once in the UK, the machines are stored at a depot in Tilbury – ready for a speedy distribution to dealers.

14 · Business Reporter · October 2014


Hanging on for a rollercoaster ride

The future

Driving standards in construction Norman Foster As an architect, you design for the present, with an awareness of the past, for a future which is essentially unknown


Business Zone


n a dynamic, challenging marketplace, to stand still is to stagnate. As the world’s largest producer of bricks, that is the antithesis of how we at Wienerberger like to do business. This autumn, we announced plans to reactivate two mothballed factories, bringing our total in the UK to 14 factories (18 production lines for bricks and tiles), and increase annual brick capacity by 200million. This means that Wienerberger has increased capacity to manufacture the core material for an additional 25,000 new homes each year. This increase, and the way Wienerberger has expanded to respond to social and economic needs, offers a perfect example of the company philosophy in practice; a microcosm also echoed in numerous other projects. Our construction products cater for the entire building envelope, taking a fabric-first approach to sustainable construction, and expertly blending the time-honoured qualities of traditional building materials with the latest technical progressions of Building Information Modelling (BIM). Indeed, the dedicated Wienerberger BIM Lab portal means our products can

be easily incorporated into complex digital plans. Yet BIM Lab is just the tip of the iceberg. This year, the first Wienerberger e4 brick houses will be completed, as a result of our fully costed concept responding to the UK’s need for new homes that are affordable, desirable and sustainable. Indeed, though sustainability is a major part of the e4 project, it is certainly not limited to it. In 2014/2015 we are investing more than £25million in further improving production efficiency, energy performance and increased capacity but also on new products and building solutions that help us pave the way towards a more sustainable future. As a result, our CO2 emissions are already 12.5 per cent lower than the industry average for brick manufacture,

and we have also delivered the first carbon neutral roofing factory in the UK. All of this activity is part of a clear strategic focus that isn’t just about commercial success and growth, but creating a tangible construction legacy. Whether it is major capacity expansions, the e4 brick house which is setting standards as a concept, BIM Lab or sustainability initiatives, we are not content to simply be part of the construction industry; we want to drive it, to set standards, and make the best possible use of the full range of solutions and services we offer. Keith Barker (left) is commercial director at Wienerberger 0161 491 8200

In focus: Why the future’s bright for trusted business


second-generation, family-run business with close to 60 years of experience in the civil engineering and groundworks sectors, O’Brien Contractors is a trusted, successful name in Midlands construction. Ambitious and forwardthinking, O’Brien has always believed a strong investment in people and technology are important to help it stand out and be recognised as a leader in the field. This has proven to be a winning approach, as O’Brien has been recognised with a host of national industry

awards, including most recently being named “Tomorrow’s Company” by Construction News and “Contractor of the Year up to £300million” by Building Magazine. O’Brien provides a catalogue of construction facilities, ranging from full

design and build capabilities for projects up to £10million, 3G sports pitches and specialist plant hire. Some 29 projects have been completed over the last 12 months across the Midlands as O’Brien continues to grow its portfolio as a principal contractor on high-profile schemes,

including the delivery of the £250million Nestle factory in Derbyshire and £7million of works for Jaguar Land Rover. With 120 full-time staff, O’Brien’s growth is significant, recently announcing record profits of £1.46million against a turnover of £17.5million, with a projected turnover of £25million for 2015. O’Brien sees every challenge as an opportunity to expand its experience and every contract is a chance to exceed its customers’ expectations. 01926 423 918

Surrey-based Marbank Construction starkly illustrates the cycle of private-sector commercial construction since the start of the financial crisis. Between 2008 and 2010 turnover plunged by 95 per cent, from £90.7m to £5.3m, before recovering to £36m in 2014. With more than £50m of firm orders placed for 2015, recovery has been secured. “Few firms experience such volatility and survive, let alone remain profitable as Marbank has. That takes a very strong management team,” says partner Gary Heywood from auditors Haines Watts. Why was Marbank’s experience so extreme? How did it react? “Until 2008 we focused exclusively on private-sector commercial work,” explains MD Mark Woods. “This stopped when bank funding disappeared. Most clients survived, but with development activity on hold. “We acted early and cut costs aggressively, while working hard to maintain client and key stakeholder confidence. Directors’ salaries were frozen and pension contributions stopped. More positively, we diversified successfully into high-value residential construction to balance our workload and continued to invest in IT.” What are the challenges now? Woods continues: “Construction will always be cyclical, but we’ve rebuilt the team, and we constantly strive to improve the business. Client-driven change, combined with increasing environmental and other compliance requirements demands professional management, and throughout Marbank’s 20 years we have consistently attracted outstanding professionals to our team. Supporting people with efficient IT lets us focus on delivering top-quality projects safely and on-time. “Managing the downturn was difficult, and dispiriting. Growing is tough, but it’s positive and exciting, and we’re looking forward to the challenges ahead.” Steve Brown is finance director at Marbank 07967 674377

Business Reporter · October 2014 · 15


The debate What are the main challenges facing the construction sector?

MD, construction and design Morgan Sindall

Pat Boyle

Executive director Osborne

Andy Steele

Chief executive officer Keepmoat

Dave Sheridan

Chief executive Construction Equipment Association

Rob Oliver

Madani Sow

On the back of the recession, the market upturn will bring rising costs and a need for businesses to invest to be ready for an improved economy. This challenges firms to make sure they have appropriate resources and supply chain infrastructure in place. In addition, the lack of clarity surrounding government policy on capital expenditure will increase during the run-up to, and following, the general election, making it difficult for companies to invest in preparation for work-winning activity. Businesses also need to increase investment in attracting new talent. This not only means encouraging graduates and apprentices to join, but also promoting construction as a career for school-leavers who may consider our industry when choosing further or higher education. As the economy improves, the companies that succeed will be those that have confidence to make bold decisions, to invest in relationships, technology and talent, and respond to challenging market conditions.

As an industry our natural mindset is to find solutions to the challenges we face. From finding the resources to meet the upturn in demand in construction to addressing the digital revolution through Business Information Modelling, we are born solution finders and deliverers. And therein lies the fundamental challenge for the construction industry. We focus on the solution rather than really understanding our customers’ needs in the first place. Do we ever as construction professionals ask our customers whether a building is actually the real need? Do we ask whether there is a better, more efficient way of meeting that need? How often do we really take the time to understand the needs of our customers, or do we act on what we think they want? It is a radical shift in mindset. But if, as an industry, we want to aspire to being part of the 3 per cent of businesses judged to deliver the ultimate customer experience, it is one we need to adopt.

Over the past year, Keepmoat has grown solidly with a 5 per cent turnover increase, significant contracts and record new homes sales. However, success does not come without its challenges. Although the UK’s economic recovery is well underway, it is inconsistent across the country. As a national business, we are mindful of these variations and have to adapt our strategies accordingly. There is still an ongoing skills shortage across all construction trades. At Keepmoat, we are committed to training and supporting the next generation of construction talent in a bid to bridge this gap. There are added pressures to be more resourceful in sourcing our materials as supply chain prices are increasing due to limited availability. Lastly, there is lack of clarity in terms of government spending commitments within the sector. Although our project pipeline is attractive, it does affect visibility for future planning.

The UK construction equipment industry has twin challenges. Promises of more investment in rail, transport and housing must bear fruit – and not be kicked into the long grass when national finances continue to be squeezed. Certainty about the construction pipeline breeds confidence and stimulates our biggest home market, the plant-hire sector, into buying activity. We rank as the fifth-biggest producer of construction machines worldwide – but depend on market growth to prosper with more than 60 per cent of what we produce going overseas. The mainland European market doesn’t help, and the sooner Europe regains its economic confidence the better – but it could be a long haul. Meanwhile, EU regulation brings us a lot of extra cost for limited benefit. Nevertheless, our latest sector report confirms that we are an £11billion industry – with vacancies and opportunities not just for engineers and technicians but, increasingly, for IT, sales and management skills.

There’s no doubt one of the biggest challenges is the supply chain and skills shortage: from bricklayers to quantity surveyors, there’s a chronic lack of expertise. This has the potential to impact project delivery and may affect the continued growth of the industry as a contributor to the UK economy. Businesses have responded, making salaries more competitive – but the construction industry needs to do more to attract talented people, encouraging them to develop their careers within the industry. Of equal concern is the continued dissonance between the way housing, construction and infrastructure are dealt with, nationally and regionally. They are inextricably linked; unless we start addressing them as such, pressure on our major cities in terms of housing and office space will keep increasing and other cities will be left behind. We need to get out of this cycle of responding to immediate or emerging issues and develop a long-term, holistic approach.

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CEO & chairman Bouygues UK

Spotlight: Increasing industry efficiency and performance


K-based engineering firm Nylacast is renowned across the world for its innovative plastic solutions. The word “plastic” can sometimes be a vague term, with many perceiving it as an inferior, low-grade material that is generally used for large-volume production of simple everyday items, from toys to carrier bags. However, when considering the extreme and arduous environments making up the nature of the construction industry, it is clear to see how Nylacast polymers such as Nylube and Oilon are widely used within construction equipment used in this industry across the globe. Holding extensive industry experience, Nylacast works closely with designers, engineers and manufacturers of construction

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concentrated focus on continuous development, coupled with strong dedication to delivering high levels of quality, service and innovation. Whether the function of a component is to increase running and performance of the equipment, to simply eliminate maintenance needs or reduce weight to meet industry regulations, Nylacast materials are lightweight, corrosion and chemical resistant, selflubricating, wear and abrasion resistant with a low coefficient friction of just 0.08, often recognised as the perfect solution for the tough environments faced within the construction industry. +44 (0)116 276 8558