2017 will be a year of “feast and famine” for contractors

Grant Prior 8 years ago
Share

The year ahead will be one of “feast and famine” for contractors – depending on what sector of the industry you specialise in.

KPMG head of infrastructure, building and construction Richard Threlfall is predicting very different 2017s for many contractors.

He said: “2017 will divide the construction sector into winners and losers.

“Contractors in infrastructure will win more work as Government and utilities companies continue to spend heavily on road, rail and energy investments.

“Contractors who depend largely on commercial demand will see a decline in demand as corporates continue to delay investment decisions pending clarity on Brexit.

“We will also see significant regional variation. The West Midlands will benefit from the HS2 effect which has already seen an uptick in investment into the region, whilst worries over Brexit will continue to gently deflate the London housing bubble.

“An industry divided by demand will nonetheless be united by the common challenge of rising materials prices, already responding to the fall in the value of sterling.

“The skills shortage will add further pricing pressure in civils, as well as playing large in the Brexit immigration debate due to possible curbs on the provision of labour from Europe.

“I remain encouraged that the new Government has signalled its commitment to infrastructure by embracing the three Hs – Heathrow, HS2 and Hinkley Point – despite strong lobbying in the summer to cancel all of them.

“I am therefore bullish on UK infrastructure demand in 2017, but far less confident on the longer term.

“I remain concerned that as the economy weakens the Government’s investments in infrastructure will become less sustainable.

“Rising inflation and the subsequent erosion of buying power will mean less Government income from taxation.

“I expect this to result in delay to schemes like Crossrail 2, the Trans-Pennine road tunnel, HS3 and other mega projects.

“And similarly I expect regulators to put downward pressure on utility investment programmes as household incomes are squeezed.

“Amidst all this macro-economic uncertainty, construction industry CEOs need to keep focussed on the prize of achieving competitive advantage through offering clients greater efficiency and predictability.

“Whilst politics and economics may dictate the winners and losers of 2017, in the long-run this industry will be owned by those who invest in technology and skills.”

Latest news

Deck falls off huge scissor lift at Winvic site

Two men seriously injured as platform plunges to the ground
2 days ago

Bouygues seals deal for £119m Cardiff college campus

Construction to start in June on two new buildings
2 days ago

Bid race starts for £15bn schools framework refresh

DfE throws framework open to more contractors
2 days ago

Berkeley’s £600m Borough Triangle project approved

Controversial scheme features two towers of 38 and 44-storeys
3 days ago

London Mayor calls in blocked 600-bed student scheme

Refused 20-storey London PBSA block may still be built
2 days ago

HG to build 500-bed London Stratford student scheme

Work will start later this year subject to gateway 2 safety approval
3 days ago

Arrest after pedestrian death on construction site

Tragedy during site preparation works for new Wigan car park
2 days ago

British Steel threatens closure of Scunthorpe blast furnaces

Chinese owners say sectional steel and rail supplies will be maintained
3 days ago

Planning green light for Sheffield warehouse site

Existing factories to be demolished in new scheme for Rula Developments
2 days ago

New rail property company to unlock land for 40,000 homes

First four sites released in Newcastle, Cambridge, Manchester, and Nottingham
3 days ago

Drainage specialist Subscan files administration notice

Specialist employing 131 people files court notice
3 days ago

Four win Network Rail £300m engineering design deal

Eastern region deal will include design for Northern Powerhouse Rail
3 days ago

Funding go-ahead for Banwell bypass after fresh cost hike

Galliford Try contract rises £14m to £64m after final design change
4 days ago

Graham wins Southport £75m Marine Lakes Centre

Firm replaces Kier which parted ways with backer Sefton Council
4 days ago

Chancellor unveils extra £2bn capital spend a year

Construction promised a defence dividend in military base and homes upgrade work
4 days ago

McLaren confirms subcontractor team on £135m warehouse job

Work starts on TN2 Gateway site in Kent.
4 days ago

Vistry profits slump after site costs reporting debacle

House builder launches internal whistle-blowing service in business culture review
4 days ago

Severfield chief to step down

Alan Dunsmore to leave structural steel group by end of June
4 days ago

Funding hurdle remains as Lower Thames Crossing gains consent

Government claims £9bn project may start in 2026 as private finance options explored
5 days ago

Mace wins £600m Euston Tower overhaul

1970s tower's foundations and core to be retained as floor plates extended
5 days ago

Summer start for main works on London green tower

Axa sanctions start at 50 Fenchurch Street 36-storey office block
4 days ago

Japan’s leading flats builder JVs with L&G for UK push

Partners plan to build over 1,000 rental homes in London
4 days ago

Wates submits plan for 1,000 homes Harrow council scheme

Former civic centre Poets' Corner site kicks off housing partnership
5 days ago

Morgan Sindall upgrades forecast for next 12 months

Overbury fit-out arm gets off to a flying start in 2025
5 days ago

Restructure underway at Henry Boot Construction

New management team restructures business after drop in turnover
5 days ago

Government pledges £2bn stop-gap funding for 18,000 homes

Funding avoids cliff-edge in social housing delivery before new grant programme agreed
5 days ago

Just two major new roads schemes to start this year

National Highways sets out one-year interim spending plan after RIS3 delay
5 days ago

Plans go in for £400m GRAHAM Manchester site

Demolition and enabling works underway with main construction set to start next year
5 days ago

Building safety levy rate set at up to £10,000 a home in London

Levy introduction pushed back a year to Autumn 2026 - list of new rates
6 days ago

BAM wins £100m revamp of Broadgate Tower in London

Front of tower 3-storey extension to use cross laminate time and re-used steel
6 days ago

Contractor services