0800 060 8698 info@glenigan.com

Request a Call

We encourage you to read our privacy and cookies policy.

With two major local contractors collapsing with the loss of hundreds of jobs and fears over the impact of Brexit, confidence in the Scottish construction industry is low.

In June, Scottish construction companies Paisley-based Lambert Contracts, which turned over £15 million a year, and Bonnyrigg outfit Crummock, which had revenue of £24 million, collapsed. Cash flow and tight margins helped bring down both companies.

Confidence was already falling according to the Q1 2018 Scottish Construction Monitor, which showed that 57% of Scottish builders are concerned about the impact of Brexit.

The Construction Industry Training Board estimates that 7,300 European Union nationals are working in Scotland but this is only 4% of the country’s workforce compared to 8% across the United Kingdom.

The Scottish Building Federation (SBF) is concerned this ratio may change.

SBF managing director Vaughan Hart recently warned: “An exodus of EU nationals from London's construction sector could be a significant drain on the availability of labour and skills here in Scotland, as more Scottish workers relocate to take advantage of job opportunities down south.

“In that context, I think our members are rightly concerned that the Brexit process could drive up labour costs for them over the next five years. Combined with declining industry output across the UK, it's therefore also unsurprising that general confidence amongst employers about the future outlook for the industry remains weak.”

Brexit fears unfounded?

The Federation of Master Builders’ Q4 2017 survey also echoed fears about skills shortages in Scotland, but the country is better placed to cope than other parts of the UK.

Data released in June 2018 showed that construction was the biggest contributor to Skills Development Scotland’s modern apprenticeships programme. The number of MA construction starts in 2017 rose to 6,104 starts, up from 5,934 in 2016/17.

Stephen Sheridan, skills planning manager for construction at Skills Development Scotland (SDS), said: He said: “Employers in the construction industry can rightly be proud of their track record in using Modern Apprenticeships to attract new recruits.”

Civil engineering work falls

Civil engineering work has bolstered Scottish construction workload in recent years, after the Scottish government pledged in 2012 to kick-start 54 major infrastructure projects.

Many are now nearing completion, such as the troubled £745 Aberdeen Western Bypass scheme, which contributed to the collapse of Carillion at the start of this year, and a £3 billion programme to dual the A9 has been underway since 2014.

Glenigan’s construction market analysis shows that the top ranked contractor in Scotland in the 12 months to May 2018 was Robertson, which had grown its construction order book to £639.1 million (2017: £570.5 million) but 98% of this work is building-related.

Glenigan’s construction industry research covers contracts valued at £250,000 or more and shows that overall orders in Scotland totalled £5 billion in the 12 months to May 2018. This total is down 14% drop on the previous 12 months due primarily to a 23% fall in civil engineering orders.

In the three months to May 2018, Glenigan’s market data shows that the value of underlying construction project starts in Scotland were flat.

Glenigan’s economics director Allan Wilén said: “The recent collapses illustrate the delicate position of the Scottish construction market, in particular Crummock, which had significant exposure to civil engineering.

“Confidence remains delicate and we are cautious about immediate prospects for growth in the Scottish construction industry.”

Glenigan’s industry forecast for Scotland is for construction project starts to remain flat this year and tail off into 2019.

Not a Glenigan Customer?

Request a free demo of Glenigan today so we can show the size of the opportunity for your business.