Scottish builders’ confidence takes a hit

The confidence of employers in the Scottish construction industry has taken a hit as fears over future work prospects grow according to the latest survey of the membership of the Scottish Building Federation.

Employers responding to the survey are asked to rate how confident they feel about the prospects for their business over the next 12 months compared to the past year. Following three consecutive quarters during which the industry’s confidence was rated marginally positive at +2, confidence has slipped into negative territory this quarter, down seven points to -5.

Industry employers point to growing fears over the future pipeline of new work as a potential explanation for the fall in confidence. Latest official statistics show strong output across many sectors of the industry over the year to March 2017 but with major infrastructure projects still making an outsized contribution to overall output at just under £3Bn or more than 20% of the total. By comparison, the infrastructure sector of the industry contributed less than £1 billion of industry output during the 12 months to March 2007 – equivalent to 8% of total industry output.

Meanwhile, the housing sector of the industry contributed 19% of total industry output during the year to March 2017 whereas its contribution to total industry output in 2006/07 was more than 25%. Output from the private commercial sector of the industry has dropped from 25% in 2006/07 to 18% in 2016/17.

Building employers are concerned that, as major projects such as the Queensferry Crossing and the Aberdeen Western Peripheral Route draw to a close, the industry is likely to suffer a major contraction due to an apparent shortage of other work to fill the gap.

Scottish Building Federation President and Managing Director of Orkney Builders Stephen Kemp said: “Many building employers are increasingly nervous about the future prospects for our industry. There is a feeling that the underlying fundamentals of the industry are not nearly as strong as record output figures might suggest. We know that a period of record output from major infrastructure projects such as the AWPR and the Queensferry Crossing is about to come to an end. Strip away those numbers and the performance of other key sectors of the industry such as housing and private commercial don’t look that strong.

“As that infrastructure work dries up over the next year or so, we could see the industry suffer a real shock. Levels of industry employment, which have been very slowly recovering, could slip into reverse. I think that is what SBF members are now worried about – hence the reason why industry confidence has declined.”

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