Contractors warn that labour and material shortages may hold back housing projects, as a report shows bricklayers’ pay jumped 20% in the last six months and lead times for bricks, roof tiles and lightweight blocks more than doubled.
Construction firms working in the residential sector are reporting a lack of trades and skilled staff and longer lead times for materials as more housing projects come to site.
“The recession has taken a lot of talent out of the industry, I’m already in desperate need of site managers and have to compete with the likes of Willmott Dixon, which had 25 school sites starting in July/August, to take them on,” said Nick Charlton, managing director at Davis Builders. “Finding tradesmen is going to be an issue in the near term because everyone is so busy, which will mean longer lead in times to notify trades when they are needed on a job and we expect their rates to increase.”
Phillip Hall, managing director at Hall Construction, added: “Over the last four or five months labour rates at recruitment agencies have crept up in line with demand by about 3-5%, which isn’t significant but if things really start picking up those that have cut their rates over the past five years will be looking to regain financial ground… Rates for insulation products are also a worry as they have been increasing throughout the recession as a result of environmental requirements on projects and suppliers know they have something of a monopoly and can charge what they want.”
“Finding tradesmen is going to be an issue in the near term because everyone is so busy, which will mean longer lead in times to notify trades when they are needed on a job and we expect their rates to increase.”
Nick Charlton, Davis Builders
“Since last year we’ve experienced phenomenal activity, with four new build houses on site and four already lined up to keep us busy until next September,” said Hameed Ahmed ICIOB, CEO of Zack Alexander Developments. “But maintaining a qualified workforce is a major challenge over the coming years, we have taken on four apprentices and are planning to take on four more by December. Just to train them up to a level where they are functional on site is taking a long time, which has slowed down the pace of projects.”
The recent spate of house building, triggered by the government’s Help to Buy scheme, has resulted in a 20% jump in bricklayers’ pay in the last six months, according to a report in the Financial Times, which also found that lead times for bricks, roof tiles and lightweight blocks are taking up to eight weeks.
The increased costs and delays could have a knock-on impact on schemes, including non-residential, said Brendan Sharkey, head of property and construction at MHA MacIntyre Hudson: “Although housebuilders may be able to pass these costs on, particularly in the south east, increases in the price of materials and their scarcity is a UK resources issue and may restrict development elsewhere. Labour and materials costs for non-residential developments will also be affected, which will hurt the refurbishment market where prices may have been fixed some time ago.”
To help deliver housing numbers some main contractors may look to cheaper foreign labour, added Sharkey: “General contractors’ margins are being squeezed and it will take time before their clients (main contractors) are able to accept the increased prices. To meet demand, labour and materials imports will go up, which in turn will not necessarily help the UK economy.”
Sharkey also predicts a recruitment drive for building surveyors with insufficient numbers currently available to deal with the growing residential demand.
The FT reported that salaries for bricklayers at Galliford Try were breaching the £40,000 mark as builders compete for skilled workers, while Crest Nicholson said deliveries of bricks, roof tiles and lightweight blocks is taking twice as long as it did before Help to Buy.
“What would have been a gradual increase in unit numbers is instead a shock, so housebuilders are struggling to come to grips with that,” Greg Fitzgerald, chief executive of Galliford Try told the paper. “We’ve had a shot in the arm with Help to Buy but there’s a bit of panic in the industry, particularly around the supply of bricks and insulation blocks.”
Around a third of Galliford Try and Crest Nicholson’s private house sales have been achieved through Help to Buy since it was launched in April, but Stephen Stone, chief executive of Crest, said the supply chain was “struggling to cope” and 75% of its bricks are now imported compared to a year ago.
Although labour prices slumped 30% during the recession, Stone said subcontractors are now insisting on one-year fixed-price contracts, rather than two.
“Overall, we don’t see it as a big problem because sales price inflation will more than cover cost inflation and there is European labour that can step up to the plate,” he said.
