Chairman of Midas Group, Steve Hindley CBE DL, has been appointed Chairman of the CBI Construction Council, the first time a leader of a regional/mid market size business has held the post.
Here he makes the case for construction as a driver of the local and national economy:
My new role is a significant one because the council represents the entire industry – designers, constructors, supply chain and specialist contractors – as a single point of contact with Government.
It is equally significant that, in appointing someone from a mid-market, regional business, the CBI is responding to Government’s objective of delegating more power and decision making locally and regionally as well as focusing on growth in the mid-market rather than the already large and often global FTSE 100 businesses.
A healthy and active construction sector makes for a healthy economy. In 2009 the CBI and the UK Contractors Group combined to produce a report that clearly demonstrates the importance of the construction industry to the overall economy.
The construction value chain is 13% of UK GDP and employs nearly 10% of the workforce. Every £1 spent on construction output generates almost £3 in total economic activity. Between 2007-2209, construction provided a £534 million trade surplus and 92p of every £1 spent in the sector was retained in the UK. Every £1 invested by the public sector yielded a return of 56p the Exchequer making the net investment only 44p.
If you add in construction’s impact on restoring sustainable communities and its help in eliminating social exclusion, its delivery of vocational skills, its development of environmentally positive building methods and its massive contribution to reducing waste to landfill, its social as well as economic importance becomes clear.
The effect on local economies of investment by the public and private sectors in construction may even be greater. The same economic multiplier applies but there is likely to be more social engagement with the local community.
Exeter is a very good example of this where projects undertaken by Midas Group are worth millions to the local economy. These include new work at Exeter University, the new Atass building on Exeter Business Park for Summerfied Developments, major retail projects for John Lewis Partnership, Waitrose and Morrisons and an extension to the Business Park at Hill Barton.
Each of these uses local labour and we always endeavour to use locally sourced materials where we can. These Midas projects and many more like them across the South & South West of England depend on local supply chains which support a wide range of local businesses and many will have assisted local charities and community groups with fund raising or in-kind support.
So, the case for the importance of construction to local and regional economies is made – but we can do more.
I recently attended the launch of the Government’s long awaited Construction Strategy where a presentation was given by Francis Maude the Cabinet Office Minister.
The strategy’s main aim is “to create a new model for public sector procurement in order to reduce the cost of infrastructure delivery by 20% by 2015 and to capture the potential for infrastructure development to drive growth in the long term.”
Whilst some sectors, particularly retail and commercial development , have changed their procurement strategies and have seen significant improvement to outputs, others have not enjoyed the same level of benefit.
This is because procurement processes and imposed regulation have not allowed for the open collaboration between designers, contractors and the supply chain that is essential to maximising the efficiency of the whole process.
This together with a lack of attention to whole life costing, has prevented many of our important infrastructure projects being completed on time, within budget and most importantly fit for purpose.
The new strategy reveals that there will be great emphasis on effective price benchmarking and cost targeting throughout the supply chain rather than through lump sum tenders based on inadequate documentation.
Also, in future, the Government has committed to issuing a revolving two year forward programme of works where public funding has been agreed. This will hopefully give the industry the confidence to invest in training & technology and research & development.
The benefits to regionally based contractors could include increased collaborative working, more repeat business and the development of long term relationships with customers, which has been the modus operandi of the Midas Group for many years.
Our regional structure brings us close to our customers and we are very well fitted to work with them to achieve the required savings and other improvements in service delivery once a regular flow of work can be identified.
Regional/mid-market businesses are often better placed to deliver Clients requirements and to efficiently manage local supply chains than many of their much larger competitors, and I will continue to make this case with Government through my involvement with the CBI.
In the case of Midas many of our major clients recognize this as witnessed by our contracts with Land Securities and John Lewis Partnership in Exeter. In putting their faith in us – a local business – they clearly see the importance of our locally based teams, our local knowledge and our local supply chains.
