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Challenges – 2007 and beyond

James Wates

Deputy Chairman, Wates Construction Limited

Chairman, Strategic Forum for Construction

Thank you, Michael. The spotlight is shining on the UK construction industry like never before; our every move is under scrutiny. The London Olympics has already drawn the eyes of the world to the UK. This focus will only sharpen as we move towards 2012. The Government’s capital investment in new schools, hospitals and transport infrastructure (the bedrock of its public services reform programme) is once more under the microscope as we await the outcome of this year’s Comprehensive Spending Review – and just within the last couple of weeks the House of Commons Trade & Industry Select Committee has announced a wide-ranging inquiry into our industry. It will cover every issue from skills and capacity to sustainability and health and safety. It will probe and interrogate every facet of the industry – so, does all this scrutiny place our industry under undue pressure? Should we be concerned, worried about what might emerge? Should we batten down the hatches and lie low until it is all over?

Not at all. This places our industry centre stage, and that is exactly where it should be. We should relish the opportunity to demonstrate just what a vibrant, committed and successful sector construction is. For too long as an industry we have failed to punch at our weight. We could and should do a great deal more to bang the drum about our achievements – and make no mistake, we do have achievements to make a noise about.

Construction is at the heart of the UK economy – in fact it is the heart of the UK economy. Let’s look at the facts: construction accounts for more than 8 per cent of GDP, a market worth in excess of £100 billion a year; the industry represents 8 per cent of total employment, with over two million workers; there are around 180,000 firms working within the construction industry; we have had getting on for a decade of steady, sustained growth and we expect this to continue for the foreseeable future; we are a major vehicle for the Government to deliver its capital investment commitment; and most important of all, we supply the environment in which we all live, leaving behind a legacy for future generations that few other industries can boast.

We are therefore an industry which offers tremendous opportunities for the future as it has done in the past. The projects are many and varied; new roads and railways, hospitals and homes and schools, all will contribute to an improvement in our quality of life. Those of us working in construction are extremely proud of the role we are playing to bring this about. What other industry contributes more to society? We are an industry of real opportunity for a wide range of skills and talents. In the past perhaps too many of our recruits have only been young white males; we want to diversify and we are taking real steps to attract more females and ethnic minorities. This is because we are an industry that wants to attract able people – the best people. That must be the main criterion.

Of course, however much we may achieve there is always more to be done, not least in those areas covered by the people agenda – health and safety, site conditions, education and training, recruitment and retention. These will always be the issues by which we measure our success as an industry. In order to achieve success I believe there are three key objectives we must reach: first, we need to ensure our industry attracts the best possible recruits. Second, we need to ensure our industry trains and qualifies its people. Finally and crucially, we must ensure our industry safeguards its people through continued improvement and health and safety. Only by observing these three golden rules can we really hope to maintain the success and continued well-being of the construction industry and all of us who work in it.

The best way to make this happen is through commitment allied with co-ordination of thought and action. Perhaps it is not too difficult to see the underlying problem of why we do not always punch our full weight. I mentioned earlier that there are some 180,000 firms working within construction. As an industry we are extremely fragmented. This makes it difficult to speak together with a single voice and act with cohesion; yet we have shown clearly that when faced with a common threat and with a common purpose we can stimulate major change. We can make a difference, we can punch our weight.

For example, the whole industry is now embracing the Considerate Constructors scheme, established 10 years ago to minimise the negative impact that construction work inevitably makes on local communities. We are now registering under the Scheme over 400 sites a month. In the past 12 months the scheme has embraced construction sites with a contract value of over £23 billion, and is making a very real impact on public perception of our industry.

Another example can be found in the major contractors’ group, which is working to tackle occupational health risk in earnest. One early initiative is a commitment only to use hand-powered tools that have undergone independent testing to measure the hand/arm vibration health risks. The aim is that a consistent benchmark for performance will accelerate the development of power tools to reduce the risks placed on construction workers.

In a wider context the benefits of the whole industry working together to put its collective weight to good use are clear. In the past there has been a lack of a mechanism to achieve this. The establishment of the Strategic Forum has provided one potential solution. The Forum has enabled our industry to take ownership of the key strategic issues that drive us, and in tackling these issues we are keeping the agenda wholly relevant to the industry’s commercial needs.

Not surprisingly, and rightly so, health and safety will continue to dominate that agenda. Top of the list is completing the list of qualifying our workforce. A major driver for doing this has is the work that we have been undertaking with Government to engage all public sector clients to be more discerning about health and safety performance in selecting contractors. The goal is that the public sector only works with contractors with a fully qualified workforce, clearly demonstrated through CSCS cards or their equivalent.

Looking ahead, we have four clear strategic goals: to establish some indicators for measuring occupational health. There are some good lessons to be learned from the Constructing Better Health pilot project undertaken in Leicestershire over the past two years: to establish a single mechanism for recognising competence. This is fast being achieved for individual employees but not at corporate level where there is a plethora of competing standards. If we want procurers of construction to be more discerning we need to provide the tools to help. To ensure that graduates coming into the industry are clear and knowledgeable about health and safety risks; and last but by no means least, we also need to embrace more SMEs in the process.

The construction industry’s main asset is its people. In the long term our ability to attract the brightest and the best to join our industry is a key measure of our sustainability, and that sustainability cannot be guaranteed unless we raise our game in recruitment and training. The Olympics provide an excellent opportunity for doing this. The MCG members are already committed to providing 1,000 job placements to youngsters enrolling on construction courses in FE colleges, 1,000 training placements to adults who do not quality for apprenticeships, and we will also be sponsoring 50 undergraduates on construction-related degree courses. Like the Qualifying the Workforce initiative this cannot be delivered without a collective commitment from the whole supply chain. The good news is that the client, the Olympic delivery authority, is an enthusiastic supporter.

Sustainability is another issue where the whole of the supply chain has an important contribution to make towards achieving success, because this process will only be as strong as its weakest link. We know there is a tremendous amount of work being carried out on sustainability, which is why it is so important the Forum utilises its strengths as a strategic body to take an overview and draw the various strands together. We are focusing on bite-sized key targets, starting with the reduction of waste going to landfill and the reduction of carbon emissions. We are still very aware of the broader issues.

Of course while the Forum carries out this work other groups and organisations will continue to drive their own agenda, and develop the excellent initiatives already under way. The Forum’s work is intended to bring greater clarity and focus to an already busy agenda.

Creating a profitable industry and finding ways of delivering better value are integral to sustainability. A key to this must be better integration, yet we still have to win hearts and minds on this issue, and to try and get the whole supply chain to agree what we collectively mean by ‘integration’. The Strategic Forum is seeing to identify public and private sector projects successfully using integrated teams and supply chains as examples of how integration is working well in the industry. We want to help illustrate the business case for integration by highlighting the benefits in terms of safety, logistics, sustainability, quality, time and cost.

There is actually a great deal of successful integration going on already, and we need to capture this. As I look to the future it is clear to me that working together is the key to ensuring that the construction industry takes its rightful place centre stage. From wherever the spotlight shines we need to demonstrate that the industry has a clear plan to attract those best people, can persuade clients that consistent delivery and service provides value all round, can make a meaningful impact to improve the environment and reduce global warming, provide society with what it wants, and makes a reasonable profit commensurate with the risks we undertake.

In conclusion, I believe one of the key challenges for 2007 will be convincing the Government that this is not the time to reverse the increase in capital investment that has been hard-won in recent years, and which is only now beginning to bear the fruit in a number of key areas. The Comprehensive Spending Review needs to maintain that investment and work with industry to ensure that it secures best value for money and helps us to achieve the maximum efficiency and sustainability in all that we do.

When I look ahead to the various challenges facing the industry I am confident that we have the skills, capacity and will to meet them all, and I firmly believe that we will meet those challenges more efficiently and more effectively if we punch our weight as an industry that is truly acting together as a single powerful player.

Thank you. [Applause]

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