2021 review of the construction sector

Category: Property & Construction - Posted On: Dec 23 2021

While 2021 has no doubt been a tough year for many construction businesses due to the impact of COVID-19, lockdowns and Brexit, there have also been some unexpected positives.

The various lockdowns restrictions have seen homeowners investing their time and money into their properties. Whether it be a new garden room/office, an extension, or a kitchen upgrade the demand has been great for construction businesses. This has caused a significant increase in the demand for construction businesses services, which has resulted in some of our clients experiencing double digit growth. However, the immediate problem has been shortages in both the material and labour markets.

Clients have shared with us their frustrations at having full order books but the lack of materials to do the job. As such, both the price and the time it is taking to get the materials delivered has become an issue. Clients are having to manage customer expectations in terms of both price and installation date, which in some cases is just not possible to predict. Problems in the supply chain are holding construction companies back from even higher growth and profit.

The increase in demand for Constriction services is also then increasing the demand for labour that is just not there. The shortage in the supply of labour has come about from the lockdowns experienced in 2020, and at the start of 2021, which resulted in a number of construction workers moving to other sectors for work. In addition, Brexit has reduced the number of EU workers working in Britain. It will take time to get more workers into the sector and trained up, so in the short term the shortage will continue.

The shortage in labour, like materials, has resulted in increased labour costs. Employees are being offered better wages from competitors or improved terms from their existing employers to retain them. It’s certainly a good time to be employed in the construction sector.

Steven Todd, Head of EQ Property & Construction, commented,

‘Storm Barra impacted many areas in Scotland that were still feeling the effects from Storm Arwen only a few weeks earlier, and it feels like the Construction sector have also faced a number of storms throughout 2021.

We have been working with our construction clients to combat these problems with some ‘out of the box’ solutions, and some slightly different approaches. We recently heard of a construction business that purchased another business in part to have access to their staff as they couldn’t find the staff needed elsewhere.

2022 should hopefully see improvements to the issues with supply chains, prices and delivery times, but staffing issues are likely to remain for some time yet. Growth in the construction sector is predicted to continue in 2022 which will be vital for the recovery of the Scottish and UK economy.’

Our EQ Property & Construction specialists will continue to support our clients through this incredibly busy period, offering support and advice on issues that impact the industry.

If you have any questions, or want to discuss your circumstances, email our EQ Property & Construction team at property@eqaccountants.co.uk or contact one of our offices.