Cost of materials and the challenges of recruitment – The dominant topics of conversation while Networking
Sometimes networking involves having the same conversations over and over, but it is really interesting to see what is affecting the Oxford construction industry, and the concerns we all share. I recently (7th July 2022) created a poll on LinkedIn to see what everyone thought would be the hot topic of conversation at the Construction Excellence networking event that night. Boris’ resignation was the clear winner – because it was the news of the day – but concerns over the rising cost of materials and recruitment challenges came joint second.
Whilst it’s not always easy to spot positive trends, because we all naturally tend to talk about issues that are negatively affecting us as professionals or individuals, everyone I spoke to was ‘very busy – too busy’. Whether that is people not willing to admit they’re not as busy as they’d like, or a reflection of the lack of talent in the industry, it seems that despite concerns about materials, fuel, cost of living, the Ukraine, Brexit and Covid – we are all still doing OK.
I am not going to comment on Boris’ resignation, as it’s too political, but it was interesting to dig into two of the other major concerns.
Rise in cost of materials
There have been so many factors that have led to this perfect storm of material price rises – according to the BCIS Cost of Materials Index, the percentage rises fluctuated between 2018-2021 but were only 4.8% in both those years before an incredible 17.6% increase in prices in 2022.
A global increase in demand for construction materials, which I can only imagine the pandemic affected in terms of everyone looking to improve their homes, gardens and living environment -coupled with the lack of materials, ironically caused by the pandemic and its lockdowns – plus the war in Ukraine and Brexit has led to materials prices at a 40-year high.
The cost of labour is also set to increase as the cost-of-living increases, (the rising cost of fuel making the most significant impact) and Brexit severely impacts the UK labour market.
In the image below (source: RICS) we can see how timber and steel have seen the greatest increase in price.
So, how is this affecting us all day-to-day?
Everyone I ask at networking is still very busy, or maybe they are too embarrassed to say they could use more work. If asked ‘are you busy?’ my standard reply is ‘yes, very – but we could always do more’.
As business owners, we are all looking to keep everyone happy, directors, clients, and employees. SWJ is still busy and considers the construction industry to be buoyant and recovering from the impact of the pandemic. Working practices have changed with more people working from home and more meetings being had via MS Teams or Zoom, saving overheads and expenses. While costs of construction are increasing those costs are being passed on in the private sector and we don’t see an indication that the industry is slowing down.
Looking at different reports and forecasts like Glenigan’s UK Construction Industry Forecast 2022-2023 we would agree that despite the challenges the construction industry will continue to grow, but we all need to plan for increasing costs and how we’ll either absorb or recover them. Staffing and labour costs are a big part of this concern as it’s an employees market at the moment – and that leads me onto the second biggest conversation subject.
Everyone I speak to, in whatever industry seems to be struggling to recruit. The pandemic caused such disruption in education, mass redundancies and huge movements of people away from industries like hospitality and tourism – but the construction industry is also really struggling with a lack of talent, skills and experience. This lack of talent is a major frustration for all directors/business owners I speak to. Candidates are in the position to demand crazy salaries for their experience and when placed they can be quickly headhunted and move on.
I think a major concern is that because of the shortage of talent and experience, people without relevant experience are being elevated to roles they’re not qualified to do – which could potentially cause huge problems.
We have recently been lucky enough to recruit both a senior and a graduate structural engineer. We have a long-term view of recruitment and offer placements and work experience to enable us to grow our talent – but we can’t compete with the lure of big cities like London and Bristol, despite Oxford having its own obvious attractions. I think the best recruitment policy is to always be on the lookout for talent and be prepared to nurture it if needs be. The directors at SJW work hard to make working with us as rewarding as possible, not just financially but through the quality of our clients, projects and daily interactions as a team.
I am not sure what the future holds for the construction industry but all the complex and multiple factors that are affecting it, including the change in government leadership, will continue to dominate networking conversation for months to come.