How Brexit will impact the Construction Industry? Bottlenecks, Preventive Actions and Opportunities…
Probably All the British Construction Leaders feel the “Relief” on Christmas Eve (2020) after the UK and the EU strike the trade deal without additional tariffs or quotas on Building Materials. But concerns remain over the availability of materials, price rises and skill shortage.
The Brexit affects plenty of industries negatively while the recovery of some industries was faster than others. Construction was one of them which declines 45% during Apr-2020 and recovers back to usual output values in an 8-month period.
Source: Office for National Statistics – Monthly GDP
In a statement, the government said: "We have signed the first free trade agreement based on zero tariffs and zero quotas that has ever been achieved with the EU." The deal is the biggest bilateral trade deal signed by either side, covering trade worth £668bn in 2019. Read Trade and Cooperation Agreement (inc. Annexes and Protocols -1246 pages)
The Construction Leadership Council said the deal will “undoubtedly help to avoid some of the risks of delay and disruption”, while the British Merchants Federation (BMF) said it now has the assurance of “the continued free flow of materials”.
After months of uncertainty, the construction sector welcomes Green Home improvement scheme, new infrastructure projects and some other promising regeneration projects in the pipeline.
And Alan Vallance, chief executive of RIBA, said: “While this deal provides us with some certainty around the future relationship between the UK and EU, hesitation and vagueness around trade in services remains a serious concern for our profession.
However, few other constrcution leaders warned: “We remain concerned over the capacity problems at UK container ports, which in recent weeks have demonstrated how quickly shortages and consequential price increases can occur.”
Watch out for Price Rises
To avoid potential price rises during uncertain times, plan your projects in advance which are months even a year away. If you can order some of your materials early and store them, this could waive the unexpected price increases due to Brexit and Covid related manufacturing delays.
A potential way to do that could be via digital solutions such as planning on ERP systems, healthy documentation of RFQs on your platforms and give a try to add few new suppliers to your databases, maybe from different regions, geographies.
"In 2020 the BMF reported a 150-300% increase in demand for timber-composite products, such as fence panels, fence panels and decking."
Risk assessments-operational planning has always been a way to assess the effect of essential material shortages to the progress of your projects. However, Covid makes it (nearly) impossible to assess the operational reductions / cut downs of (especially) international suppliers, thanks to lockdowns...
Thus, a closer relationship - communication with your suppliers becomes important more than ever.
Need of New Suppliers / Alternative Supply-Chain Solutions
The availability of supplies will also be influenced by the length of supply chains, which remain strained, although not entirely due to Brexit. There has reportedly been a slowdown in the production from some factories in the EU because of Covid-19.
This leads companies to search new regions / suppliers to source their materials, however, it`s not always easy to build a fresh relationship with a supplier that you have never met in person / worked before. To tackle that issue, outsourcing - consulting companies play an important role to bring two sides together while protecting their right and keep mutual benefits on front.
Labour & Skill shortage can be solved by outsourcing
The UK construction sector has a disproportionate dependence on migrant labour from within the EU in relation to low-skilled or un-skilled work. Many higher-skilled roles are also occupied by EU Nationals although the proportions are much lower. Overall, in excess of 28% of the construction industry workforce originates from EU Member States.
The Construction Industry Training Board (CITB) recognises this in its 2020-2025 Strategy Document and has to concede that, in reality, there is no practical solution which is likely to be able to address shortages in in the near term.
At Levene Consulting, We are aware of the issues faced by the construction sector and would like to do our part to propose solutions for British Merchants, Construction Professionals, Builders to tackle the issues raised during uncertain times due to COVID-19 pandemic & Brexit.
HERE, Our proposed solutions to addressed problems:
PROBLEMS TO ADDRESS & POTENTIAL DIGITAL SOLUTIONS:
Price Rises - An E-Sourcing & E-Auction Software can keep all your RFQs in centralized systems, allow you to request new RFI - RFP - RFQ effortlesly, that would allow companies to plan efficiently by tracking down the past / forecast costs and while achieving competitiveness among their suppliers via E-Auction.
Material Shortage -A Supplier Relationship System (SRM) would allow the companies to manage their suppliers from a single platform by creating their profiles, strengths - weakneses, filter according to category, and even rate them with their operational efficiency. In a way, the company invest into maintaining better relationship with their suppliers would obviously benefit with a healthier communication.
Supply-Chain Disruptions -An E-procurement system allows you to build more efficient (shorther, less errors, transparent, scaleable) process flows when compared with traditional ways. In addition to process flows, it also enables you to manage your catalogs (items,materials) from a centralized platform. Once up and running, the companies find it easy to integrate international suppliers into their system which keeps the diversity and reduce potentail disruptions in supply-chain.
Labour Shortage - Well, the Labour shortage is a more critical issue compared with all above three combined. There is no evidence (yet) if the construction industry will be affected by the skilled labour shortage due to Brexit however, the only practical & easy to implement solution could be to keep a list of outsourcing partners from different regions with strong reputation for a support in case your future project falls under risk.
A strong Potential Bottleneck Solver could be the Turkish Construction Companies
Turkish construction companies are among the world’s highest rated and most active. As the Turkish construction sector boom has slowed, Turkish businesses in the sector are now using their proven expertise to successfully explore other markets. UK companies can benefit from forming partnerships with them. Read more...
Turkey has experienced a rapid growth and transformation in construction sector starting from early 2000s, between 2010-2019 the construction companies gained valuable know-how both in Infrastructure, Domestic and public sector projects.
Late 2010s, the industry shrink thus leaders start to look for other regions to capture new revenue generating project that leads a global foot print across Africa - Asia and Russia.
Turkey ranks 2nd under Top 250 International Contractors List after China with 44 Contractors in 2019
Few Construction Materials that you can find in Turkey with Competitive Pricing and good quality:
Structural Chemicals and Insulation Materials,
Steel Pipe (especially Welded),
Flooring & Wall Covering
Would you like to hear more about Procurement Opportunities in Turkey?
Here, at Levene Consulting, with the support of our close & reputable partners in Turkey and local service providers based in UK, we aim to be your reliable bridge into Turkish market and ease the decision making process for you by right data and transparent consultative approach.
Who we are? We are a boutique consulting firm based in London / UK specialised in TR-UK trade & business. We work with some of the biggest companies in the Turkey which allows us to source an opportunity faster than anyone else.