Reasons to be cheerful
This issue’s guest columnist says there are plenty of reasons for optimism in the year ahead – and those electrical businesses that have an effective strategy in place will do best when it comes to avoiding any obstacles and reaping the rewards
In my role as a business improvement consultant in the UK construction industry, I spend a significant amount of time looking at economic forecasts to get a handle on where the economy is heading and how it will impact the industry and my clients specifically.
At this time of year, all business owners and leaders want to look ahead with certainty and optimism, but recent economic reports such as the S&P Global/CIPS UK Construction Purchasing Managers’ Index don’t make for encouraging reading.
“Poor demand has seen supply chain managers reducing spending on materials, resulting in the sharpest fall in buying activity for over two-and-a-half years”
With December’s activity slipping below the crucial 50 no change mark to 48.8 for the first time since last August, December saw the steepest fall in activity since the beginning of the pandemic in May 2020 and a similar plummet in pipelines of new work.
Poor demand has seen supply chain managers reducing spending on materials, resulting in the sharpest fall in buying activity for more than two-and-a-half years.
Recent months have also seen construction companies reining back on recruitment, unconvinced about economic growth prospects in 2023.
Understandably, these headwinds have a significant impact on optimism for the year ahead, but despite all the above I would encourage you NOT to be despondent.
Don’t panic... strong businesses will survive
I’ve been around this industry long enough to have come through the great recession of 2008 and the resulting decade of austerity, quickly followed by a pandemic which sent the world economy into a tailspin and from which we are still trying to recover.
However, throughout all these challenges, construction has shown itself to be incredibly resilient. This industry employs some of the smartest and most innovative people that I’ve come across in my working life, who always seem to find ways to overcome the obstacles put in front of them.
This shouldn’t come as a surprise to anyone, certainly not those SELECT Members who work in the industry and who see the practicality, creativity and technicality that the sector processes.
Yes, there are challenging times ahead and some companies will inevitably struggle and fail, but let’s be honest, many of those companies have been poorly run. They have failed to adapt to the new reality, buried their heads in the sand and hoped that everything will turn out alright. Unfortunately, it seldom does.
Economic recessions are like droughts in the animal kingdom – they affect the weak. Those who can anticipate change on the horizon and plan and adapt accordingly not only tend to survive, they can also thrive.
They don’t rely on luck and have instead developed strategies that optimise their resources. They fully understand what the market and their clients want and they consistently and efficiently deliver.
None of this happens by accident. The owners and leaders of these companies make the necessary investments in time to strategise, they develop efficiencies, they’re financially prudent, build lasting relationships with their customers and supply chains and, most importantly of all, they look after and invest in their people.
Training and marketing are too important to be cut
From experience, the first thing that invariably happens is that businesses stop investing in marketing and training, with these two areas always getting cut. My advice is that these are the LAST two areas you should be looking to cut back on. If anything, you need to maintain at the very least, but preferably you should be investing and here is why.
In a recession there are still opportunities to be found – you just need to work a little harder to find them. Investing in your marketing helps you reassure current and prospective clients that you’re open and ready to do business. While others are cutting back, you’re building your profile, which gives clients confidence. The last thing you want to be in this circumstance is anonymous, yet that is exactly what most do.
If you increase your business development activity, i.e. prospecting, you’ll be able to identify more opportunities to win work.
There are clients that irrespective of the economic climate need to spend money. A good example of this was through the recent pandemic, the domestic sector saw massive growth as people invested in their homes. Supermarkets and distribution centres etc all saw an upturn in business, and the same is now true of the big oil and energy companies.
The drive towards net zero is another area that will see growing investment over the coming year and beyond as the UK strives to meet is legal obligations. The opportunities are there, you just need to be looking for them.
Inspire your talented people
The same is true with training. The last thing you want to experience if you find your business in challenging circumstances is realising that your staff aren’t fully engaged.
Talented people will always find or create opportunities for themselves and they’re usually the first to jump ship if your business shows the first signs that it might be in difficulty.
In times of adversity, you want and need your best people to come to the fore; they’re the ones that can best adapt to the new changing environment and can show creativity to make the most out of the situation.
With the current skills shortages and an ageing workforce, ALL businesses need to be investing in their people. If you don’t commit to their development and show that you value them, one of your competitors certainly will!
The same is true about your working arrangements. The pandemic proved that most staff could work effectively from home, with little or minimal supervision and that productivity doesn’t necessarily have to suffer.
That genie isn’t going back in the bottle and staff now expect employers to offer flexible working arrangements. If you can’t, then your competitors will – or alternatively your people will leave the industry to find one that offers a better work/life balance.
There’s no doubt that 2023 will be a challenging year for the construction sector. However, with the right strategy in place, there’s no reason why your business can’t thrive as others falter.
“The last thing you want to experience if you find your business in challenging circumstances is realising your staff aren’t fully engaged”
Looking ahead to a year of change
Alan Wilson has joined fellow members of the Construction Leadership Forum (CLF) in a special video to outline their hopes for the industry in 2023.
The SELECT Managing Director is among leaders from across the sector who have revealed their potential improvement areas in the year ahead, driven by the Scottish Construction Accord.
Alan says improving the procurement process is his top of his wish-list for 2023 – and believes the new Accord can help make it happen.
He says: “This will be a really exciting year because it will see the first part of the Accord working in practice, and the important part of that for me is the procurement sector.
“It’s really important that we all work together and collaborate to ensure that everyone from specialist sub-contractor to main contractor client gets together properly and we all ensure that payment retention and good work is shared throughout the whole process.”
Ivan McKee, CLF Chair and Minister for Business, Trade, Tourism and Enterprise, also outlines his vision for 2023, revealing: “Wide-ranging changes are needed across the industry to prepare for the transition to net zero and the new decarbonisation workload, including upskilling the workforce and embedding a fair work culture.”
Peter Reekie, CEO of the Scottish Futures Trust, uses the video to reinforce his wish for a greener industry, and says he believes the Accord can be a force for positive change.
He tells viewers: “We have to do things differently and show real leadership on climate change. We need more retrofit, more modern methods of construction, more digitalisation, more and different skills for energy efficiency and embodied carbon resilience and productivity.”
Stephen Good, CEO of Built Environment Smarter Transformation (BE-ST), also echoes the need for a greater focus on renewables.
He reveals: “My vision for 2023 is of a built environment that’s focused on our net zero transformation, delivering an inclusive and sustainable economic, social and environmental impact that benefits all the citizens of Scotland.
“I’d like to see us more rapidly adopt and scale up some of the amazing innovation products, processes and systems that already exist in Scotland. We must also work together and collaborate more closely than we’ve ever done before.
“We also need to move at pace because the climate clock is ticking and we’ve got a lot of work to do. We need to speed up our efforts and actually treat the climate crisis like a crisis.”
Meanwhile, Lynsey Brydson, Head of Digital at BE-ST, says equality and inclusion is also a key priority for 2023.
She said: “We have to address the issue of how we make the industry better for everyone.
“We know where the issues are and understand the problems and barriers we face, so by working together we’ll address them much quicker.”
Watch the videos at www.constructionforum.scot
A focus on improvement
Launched by the CLF last October, the Scottish Construction Accord is a shared commitment to help businesses thrive, enhance working conditions for employees, improve the delivery of construction quality and assist with net zero goals. Driven by a Transformation Action Plan, it highlights the need to improve the “capability and diversity” of the construction workforce, reform procurement practices and increase the use of digital technology and modern methods of construction.
Paul McDevitt is Managing Director of McDevitt & Co, an experienced business consultancy that helps to inspire people, improve productivity and increase profits in the construction industry. Find out more and contact him at www.mcdevitt.co