Donal Byrne, a senior development adviser for the construction industry at Enterprise Ireland, explains why Irish exporters in the sector are winning business in the UK.
There are high-potential opportunities for Irish exporters in the UK construction sector notwithstanding challenges posed by Brexit. Global Irish construction industry services and goods exports were valued at €1.7 billion in 2016, while the number of people employed by firms supported by Enterprise Ireland is projected to increase from 33,000 last year to 40,000 by 2020. For the offsite construction subsector, the UK accounts for the vast majority of Irish exports.
A harsh winter, rainy spring, and the collapse of Carillion in January, with write downs on bad loans estimated to have exceeded £1 billion, put a dampener on UK construction activity in the first quarter of the year. Analysts are nonetheless predicting a ‘hockey stick’ progression for the sector in 2018, similar to that experienced in 2017.
A seminar, organised by Enterprise Ireland in conjunction with the Irish Precast Concrete Association (IPCA), heard that the chief source of this optimism is the British government’s commitment to a £650 billion pipeline of construction projects. While market volatility may well cause a periodic dip in sales for distinct sectors and individual companies, overall demand in UK construction remains strong.
Opportunities in UK construction
Simon Rawlinson, Partner and Head of Strategic Research and Insight with Arcadis Design and Consultancy, and a member of the UK’s Construction Leadership Council, told the seminar that he sees opportunities for Irish construction industry companies in a range of areas, particularly in energy, waste, transport, telecommunications, and social housing and urban regeneration.
The scheme with most potential is the HS2 high-speed rail link, with £55.7 billion budgeted for phases 1 and 2 of the project.
The British housing market is buoyant, noted Rawlinson, especially in regions outside London, notably Manchester and the Midlands.
A short-term skills shortage forecast for the UK industry can also benefit Irish offsite construction companies. The UK faces capacity issues due to significant remedial works required nationwide as a result of projects put on hold by the Carillion collapse resuming in catch-up mode. Brexit is also a factor, with many European workers leaving the UK.
There are particularly strong opportunities for building sector companies who are skilled in the use of digital design and building information modelling (BIM). There is also a new emphasis on optimising long-term product performance, using smart technology and the internet of things. In housing, offsite manufacturing and modular building are growth areas.
How Enterprise Ireland supports construction industry exporters
Enterprise Ireland supports construction industry exporters in three key ways. We assist companies to improve existing products and to develop new solutions that meet market needs and deliver added value. We run programmes that help to develop a corporate culture of continuous improvement to increase productivity and reduce environmental impact and we run programmes focused on improving, and broadening, the capabilities of leadership teams.
We also run Brexit Advisory Clinics for exporters and provide eligible companies with grants of up to €5,000 to help them mitigate risks of potential impacts.
Even a soft Brexit may create new obstacles to navigate. For example, if Britain remains in the European Customs Union, additional paperwork will still be required of exporters at UK border crossings. Using a freight forwarding company and a customs brokerage can reduce logistical headaches but additional management time must still be set aside to instruct third parties.
Because border hold-ups will be more likely post-Brexit, exporters will need to factor in higher costs for delays in estimated delivery times. In the construction industry, where ‘just-in-time’ delivery is a feature of many supplier contracts, it may be necessary for exporters to invest in UK-based depots to hold goods temporarily before a specified delivery date. One option discussed at the seminar suggested that exporters could invest in joint warehousing facilities to reduce the cost burden on individual companies.
Brexit is a new obstacle to trade but is not insurmountable. Specialist expertise and high-quality products that address real needs will always find a market.
This article was originally published in the Sunday Independent.