Building sector confidence drops as employers anticipate tough conditions in 2012.
21st February 2012

A challenging outlook has prompted a further drop in confidence in the Scottish construction sector, according to a major new survey of employers, published by leading industry trade body the Scottish Building Federation (SBF). The Scottish Construction Monitor is a quarterly survey of around 700 individual construction firms that make up the membership of the SBF.

The expectation of weak performance across a range of industry sectors in 2012 means the industry’s confidence rating has dropped by nine points since the last survey and now stands at MINUS 28 – six points below where it was at the beginning of 2011.

The latest survey asked SBF members to provide an overview of the general outlook for the Scottish construction industry over the next year, based on a range of key indicators including employment, apprenticeships, and the expected performance of key sectors of the industry including publicly and privately funded projects, housebuilding, and repair and maintenance.

Two out of three Scottish building firms responding to the survey predict publicly funded construction activity will drop in 2012. A third of firms expect construction employment to fall, outnumbering those predicting a rise in industry jobs this year by a factor of more than three to one. And most anticipate another tough year for housebuilding and the private sector, with nine out of ten firms anticipating these sectors of the industry to remain stagnant or to decline over the next 12 months. The survey found around 60% of employers expect the number of workers and apprentices they employ within their business to remain the same over the next 12 months, but more than 30% think the number of people they employ is likely to fall. Official statistics show that the Scottish construction sector has already lost 30,000 jobs over the 12 months to September 2011.

Repair and maintenance emerges as the sector of the industry with the most positive outlook overall, with more than a quarter of firms predicting activity in this area will rise during 2012. But the outlook for publicly funded construction activity is very downbeat, with almost two thirds of firms predicting output will drop and only 7% expecting activity in this area to go up. Although expected to perform better than the public sector, private sector construction activity faces limited prospects in 2012, with 44% of employers saying they expect activity to stay the same and 41% forecasting a decline. Housebuilding – already at an all-time low in terms of units completed annually since devolution – faces a similarly challenging year, with 40% of firms expecting activity to drop again this year and a further 49% believing it will remain static.

Scottish Building Federation Chief Executive Michael Levack said the survey results reconfirmed earlier predictions of another tough year ahead for Scotland’s building industry. Commenting on the survey results, Mr. Levack said: “The industry has already lost 30,000 jobs in the space of a year. But with more firms anticipating they will have to make redundancies this year than those hoping to recruit, there’s a real prospect that industry employment levels could drop further yet before they start to recover. “2012 looks set to be a particularly bad year for public sector construction output, with two out of every three employers expecting the level of publicly funded activity to fall. That’s a natural consequence of the cuts to public funding that will take effect over the next few years. But this survey finds little prospect of the private sector filling that gap, with 85% of firms expecting privately funded activity either to stay constant or to decline. “The annual rate of new house building in Scotland is now at the lowest level it has been since current records began in 1997. So the fact that an overwhelming majority of construction firms expect housebuilding activity either to remain static or to fall again in 2012 is a particular cause for concern.” Mr. Levack concluded: “Over the coming months, I hope the industry can work constructively with government at all levels to start rebuilding confidence that has been shattered by the economic downturn. “An excellent place to start would be to start dismantling the huge unnecessary bureaucracy around procurement and planning that has stifled our industry for far too long.”