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Mark Robinson: "The speculation around the EU referendum has allowed uncertainty to penetrate, risking the destabilisation of the supply chain"

Brexit's hidden impact on the construction supply chain

Scape Group Chief Executive Mark Robinson warns construction industry on the risk of EU referendum for UK supply chain

Posted by Stephanie Broad | June 21, 2016 | People, policy, politics, money

Ahead of a major new report into the supply chain for public sector built environment projects, which has seen over 150 leading industry and public sector managers surveyed, Mark Robinson highlights the potential consequences of instability and a magnified skills shortage in the wake of the EU referendum.  

Scape Group has carried out a comprehensive survey of the supply chain and found:

  • Long-term stability is seen as the most important element in a sustainable supply chain
  • Skills shortage is already negatively impacting workmanship, quality and budgets
  • Further public sector spending cuts could severely impact over a quarter of suppliers
  • Nearly three quarters of public sector organisations publicise projects via OJEU tenders 

Mark Robinson, Chief Executive of Scape Group, comments: “Our research has identified the foundations of a successful supply chain and examines what we need to do to improve our industry from the ground up. Whether we leave or remain in the EU, the debate itself is creating procrastination, insecurity surrounding publically funded schemes, and threatens to compound a dire skills shortage.” 

Supply chain stability

When questioned about what makes a sustainable supply chain, 72% of construction companies and consultants said that stability is the most important element and 79% of public sector bodies agreed.

In order to create a healthy supply chain, the top three features are stable pricing (67%), stable employment patterns (63%), and time efficient delivery programs (46%) according to the contractors, consultants and suppliers surveyed.  

Mark Robinson adds: “Ours is a market like any other and thrives on stability and confidence. The speculation around the EU referendum has allowed uncertainty to penetrate, risking the destabilisation of the supply chain.” 

Skills shortage

55% of industry professionals surveyed by Scape highlighted the skills shortage as one of the biggest barriers to a healthy supply chain, and 39% see the shortage negatively impacting their ability to keep to budget - with 9% listing this as critical. The public sector echoed these concerns, with 85% of those surveyed believing the skills shortage had a negative impact on the quality of workmanship.

Most concerning is that despite numerous national campaigns to increase apprenticeships and training within the industry, 19% of the companies surveyed do not currently operate an apprenticeship scheme.

Around 240,000 UK construction workers are from abroad, with most of these coming from EU countries such as Poland and Romania. To meet the growing demand for housing, infrastructure and the ambitions of the devolution agenda, and to replace workers retiring from the industry, the UK needs to recruit as many as 1 million new construction workers by 2020.

Mark Robinson continues: “It is worrying that a fifth of companies providing construction services do not have an apprenticeship scheme. The skills crisis is already affecting the quality of workmanship and the industry’s ability to keep to budget. We are currently drawing skilled workers from across the globe, but a Brexit from the EU could impact our ability to do this, so it is crucial we address this challenge at a grass roots level.”

Reliance on the public sector

The public sector comprises over 50% of all contracts for more than a quarter (26%) of the construction companies surveyed. The sector also relies on European regulated procurement, with 72% of public sector organisations stating that they publicise projects via OJEU tenders.

Mark Robinson concludes: “The recent revelations that public spending could be slashed if the UK votes to leave could spell disaster for a number of construction companies and suppliers, not to mention the families that depend upon jobs with the industry. The UK will always need robust procurement rules and we expect these to be broadly similar to the ones we have now should we exit the EU, but the public sector could face significant delays and uncertainty in the years ahead as the detail of this is worked out.  

“As the rhetoric intensifies and battle lines are drawn, it is clear that this referendum is already having a profound effect on the construction industry, no matter which way the vote goes.” 

www.scapegroup.co.uk

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