Tony Burke: Increased Labour Costs or Increased Training Costs?

Published on 30th November 2017
Avonside Group Services CEO, Tony Burke

As many of you will no doubt have read in national press and media – the government, earlier this year announced support for the housebuilding and local authority’s sectors to construct more homes. With the demand for housebuilding projects increasing and the structural demographic demand increasing for us to construct these homes, across all areas of the UK, this will inevitably place additional strains and stresses upon the industry supply chain – of which we are an integral part.

One obvious consequence is that, if a UK Government ever actually gets around to implementing a coherent strategy in to allow industry to deliver the circa 300,000 new homes required year on year it will place even further stresses upon the skilled trades within the sector.

This is not a point that is new to regular readers of this column.

If all of the above does eventually come to pass then it is good news for everybody with a vested interest in the housing market, be they homeowner, developers, local authorities or indeed construction trades.

So where’s the catch?

We don’t have enough skilled tradespeople in the construction sector, we haven’t developed an effective attraction strategy for the brightest and the best – in fact we don’t even seem to be able to compete with the low paying, zero hours retail sector when it comes to attracting new blood to our sector in sufficient numbers.

Yet here we are in a sector that has grown consistently, is set to continue growing and the pace of that growth may actually continue to accelerate if the powers that be can get their act together.

How do we attract more and better people? We have to compete with market rates. No problem I hear you respond – well there shouldn’t be, but at the moment we are experiencing unprecedented levels of supply instability, which increases pressure throughout the supply chain.

Additionally, our clients expect (and rightly so) a first-class professional service. Once again, I can hear you agree with the sentiment.

So, here’s the real catch: there is more and more work available for fewer and fewer skilled tradespeople. This is as true in the roofing sector as in any other (with the possible exception of bricklayers).

To date all the good intentions for off-site build and ‘de-skilled’ processes have made no real impact upon our customs and practices.

So really good roofing contractors can start to pick the type of work and location that suits them best – and we all know what happens in the world of supply and demand and the impact upon costs.

The medium to long term solution is to attract more new entrants and to offer them apprenticeships to develop the required skills. Since Brexit and the inevitable reduction of European Tradespeople this need has gone up substantially. But this takes time and it takes investment, and as an industry we have to decide are we prepared to make that investment.

If the answer to that question is yes, then every part of the supply chain has to accept its responsibility and contribute to the cost – and that means rising costs.

If we aren’t prepared to make the investment, we can all carry on chasing an ever-decreasing pool of quality trades – but that means rising costs!!

So there in a nutshell is the position – as an industry we have to face up to the reality of rising costs and in the real world the solution will be based upon a mixture of both types of costs.

These need to be factored into budgets for years ahead, and as a sector we need the courage of our convictions when talking to our clients about the realities we face – it will not come as a surprise, as all of your competitors will be facing the same dilemma.

And although you can expect to get resistance, your clients also ultimately realise that they want long term relationships with their supply chain (us) and they want businesses that are profitable – otherwise they can’t develop those long-term relationships.

If this sounds like a manifesto for profiteering, let me state that it most definitely isn’t. But we all need to be realistic in what we can reasonably expect people and companies that work with us to get as a return for their efforts in the environment I have described.

We should be open and straightforward in conversations about rising costs where they occur – at the very least it allows our clients to plan accordingly.

The only question is whether rising costs are diverted to developing skills or paying an increased levy for the dwindling number of skilled people we have.