Northern Ireland construction firms must make united effort to succeed
Beyond any doubt, the construction industry and the wider business community in Northern Ireland are presently facing a time of immense challenge and uncertainty.
While the realities of the situation that confront us still, in the immediate sense, pale in comparison to those of the 2008/09 recession and its aftermath, there is a clear risk that the current lack of investor and investment confidence could quickly reverse any of the modest growth our sector has seen in the past three years and have a significantly detrimental effect on industry sustainability.
In the past two weeks, UK-wide data on both Q2 GDP and the Markit/CIPS purchasing managers index has painted a very bleak picture for our industry.
The weakening confidence in the run-up to June's referendum is now, very clearly, being seen in the market in terms of new work coming out to tender as well as a significant number of major jobs that have been awarded to contractors that are facing delays in getting on site. That gradual decline in confidence in the run-up to June 23 has clearly only been exacerbated in the weeks since.
But let us not doubt that in these challenging times there does lie significant opportunity. However, for that opportunity to become an economic, jobs-driven reality, there are a series of steps which we believe the industry and government need to take together.
In respect of Brexit, it is absolutely vital that the Northern Ireland Executive, at the earliest possible stage, comes to a clear and unambiguous position on how it should seek to influence and what it wants from the negotiations the UK Government will take part in over the coming months and years. Purely from our perspective, the key demands are: √ Maintenance of the existing soft border between Northern Ireland and the Republic given the necessary and daily flows of labour as well as the contracts that our members will seek to bid, win and deliver in the Republic;
- Irrespective of what immigration system we move to post-Brexit, it is critical that the industry retains the access to the skills that it needs;
- Clarity around the future of EU funded infrastructure works and related programmes - including the future of the critical Northern Ireland Investment Fund and the York Street Interchange Scheme and;
- Access to the Single Market. No-one could or should underestimate the level of the task facing our Executive and the UK Government more widely when it comes to Brexit, but as we and others in the business community have often said, to achieve our economic potential and deliver on our ambitions, the conditions must be right. Many of the key enablers do of course stand outside the Brexit issue, and it is important that we do not shift our focus from these over the months ahead. While the Federation welcomes the outcomes-led approach that the draft Programme for Government Framework proposes to take, it is absolutely critical that this Executive mandate sees a much higher level of accountability than previous ones. For us, that higher level of accountability has three specific strands:
- Enhancing the sustainability of the local construction industry - with a specific focus on growing the margins on public sector infrastructure projects achieved by giving greater weighting to quality over price;
- Delivering the confidence critical infrastructure pipeline - inclusive of the Executive's seven flagship schemes, there must be a much higher percentage of schemes delivered on time and on budget and;
- Create the conditions the industry needs to grow housebuilding to identified demand levels - with a much stronger emphasis on making sure the levels of new private housing available increase substantially on current volumes, as well as reversing the alarming trend of declining home ownership. When you add to this the additional uncertainty of the proposed Apprenticeship Levy and the fact that, at this stage, approximately 25 Northern Irish construction companies will have to pay two statutory levies as of April, with little clarity as to where the funds from the new Levy will be spent, we believe it is no exaggeration to say that many of today's challenges truly do pose serious viability questions for our industry. Enhancing Northern Ireland's competitiveness and attractiveness as a region to do business and invest in remains our ultimate goal. The challenges before us to achieve that laudable aim will take a united effort.
John Armstrong is managing director of the Construction Employers Federation (CEF)