So now, along with every other challenge facing today’s construction industry, companies in the sector are being asked to turn their attention to increasing exports. The exhortations in the Industrial Strategy for construction are partly a case of “your country needs you”. The UK government has set itself an over-arching target of doubling exports by 2020, and construction – currently accounting for around 7% of GDP but just 2% of exports – is hardly playing its part.
Then there’s the argument that any company planning a future needs to seek out sources of growth, but businesses relying on the UK market in the next decade will be left with thin pickings. According to the authoritative Global Construction 2025 forecast, sponsored by the CIOB and others, UK output will pick up at an average of 2% a year, but that just takes us on a long slow climb back to historic levels. Contrast that with 5-6% annual output growth in Turkey and Russia, 6% in Indonesia, Vietnam and the Philippines, and 9% in Nigeria.
According to BIS it’s also a case of “export to ensure your future”. A paper compiled to inform the Strategy argues that firms engaged in exports tend to be larger, more productive, have higher absorptive capacity (or “knowhow”) and are more likely to engage in R&D than companies that do not export.
Of course, there are significant barriers to exporting for businesses in the sector. High fragmentation reduces the average size of businesses, leaving them with less manpower and resources to invest in overseas ventures. Contracting, the argument goes, simply doesn’t travel well: businesses that do venture abroad are exposed to all the usual plethora of risks without the protection of their tried-and-tested supply chains. And the intensity of competition in the UK market may make businesses less inclined to collaborate.
But it would be wrong to conclude that working overseas is a lost cause. First, BIM and Design for Manufacture could open up new avenues for exports. We are still in a position to benefit from the reflected glory of the Olympics. And there is a rising generation that already thinks globally.
And the solution to some of problems is readily available. The Construction Products Association, working with UK Trade & Investment on a two-year project to cut the £6bn construction products trade deficit, says that we’re too “British”. Rather than adopting the mindset that UK product companies, consultants and contractors will support each other on projects at home and abroad, we’re wedded to the concept of fair play, specifying the “best in class” product and not putting UK partners forward to clients.
By sticking together and being a little more “French”, construction businesses could discover strength in numbers.
Elaine Knutt, editor
