Construction Scotland (Scottish Enterprise’s construction orientated strategic arm) has released its first annual survey analysis report of the Scottish Construction Industry discussing key issues within the industry such as current opportunities and challenges, the low carbon economy and market confidence. 177 respondents were drawn from the general building, architecture and design, house building, civil engineering and repair and maintenance sectors.
Despite the economic downturn, which almost 90 per cent of respondents indicated to be a significant barrier to growth of their business, the majority of respondents indicated that significant opportunities do still exist within the industry. This is reflected in the fact that over half of respondents expected their turnover to stay the same over the next 12 months, but perhaps more significantly, around 20 per cent expect it to increase by up to 25 per cent.
Barriers to growth
As well as the economic downturn, other key barriers cited by respondents included:
- a lack of demand from the private sector;
- increased competition from companies based outside Scotland; and
- the current procurement processes
which are all affecting the opportunities available within many of the respondents “core business” areas.
With the way in which Scotland’s £2 billion of public construction contracts are awarded, set to be reviewed by the Scottish Government, a more "streamlined" process which gives greater opportunity to SMEs may be on the horizon, with the potential to break some of the barriers which currently exist within the industry.
Similarly, the European Commission is currently undertaking a comprehensive review of the EU Procurement Directives, with the intention of making legislative proposals to simplify and update the procurement rules. However, any changes as a result of these reviews are unlikely to be implemented quickly. The barriers appear to have led many within the industry to consider possible "non-core" opportunities that exist, to try to grow their businesses.
The impact of renewables
Although under five per cent of respondents believed that significant opportunity existed for their business in relation to energy generally, around a quarter of respondents believed that renewables offered an opportunity for growth over the next five years (perhaps unsurprising given the Scottish Government's focus in this area). Shorter term, around 40 per cent indicated that opportunities existed in developing new technologies and products for the “low carbon” market and almost half of the respondents believed that the upcoming carbon reduction targets were a potential opportunity for their business. Three quarters of respondents wished to explore further how they could take better advantage of the carbon reduction market.
Thinking “outside of the box” and pursuing non-core opportunities can often be a daunting task especially given that much of this non-core activity exists in the low carbon / renewable energy market, which for many are unchartered waters. However, many of the skills and experience required within these non-core areas will of course be similar if not identical to those which already exist within a business’s core skill set. The key is moving quickly and taking advantage of such opportunities now as it is clear from the survey responses that more and more businesses are considering how opportunities within non-core spheres can be generated.
The full results of the Construction Scotland Industry SurveyAnalysis Report are available here.