Brexit – How will it impact Construction?

Ok, I am going to avoid making this a doom and gloom posting; god knows I’ve read my fair share of them recently.  Having first hand experienced life in the industry back in 2008, even before the majority of British industry was waking up to the fact that banks had stopped lending, the last couple of years has been a well-earned breath of fresh air for most.  Hell, we’ve even got through a general election and Scottish referendum relatively unscathed.

So it’s on to the next hot topic, June 23rds referendum on the EU.  As Joe Strummer famously penned in 1981 – Should I stay or should I go (other, far better Clash songs exists in the author's opinion).  The Confederation of British Industry has recently said that leaving would have at least a 4% negative impact on GDP.  We need investors to be manufacturing on these shores, so specialist contractors can put up the curtain walling, etc that is made here in the UK. So what is the likely impacts to sticking a cross next to stay or go?

Stay

  • Britain has become rather accustomed to the open trading arrangements enjoyed with central Europe since 1973. 
  • An exit could sacrifice Britain’s ability to fashion trade deals and flex on regulatory standards when asking the major banks for further investment.
  • Labour costs are soaring in the industry.  This has been well documented in the services industry arena within the built environment but it has impacted building product manufacturers too.  I have recruited a number of EU professionals who have moved over from various Central European countries.  Often these individuals bring niche skill sets not readily available here in the UK; people with PhDs in specific areas of materials, manufacturing processes and sciences for example.  Over the last two years, I've twice been briefed to headhunt multi-lingual Plant Managers within the industry.  And more surprisingly, again on two occasions in the last year, I have headhunted from mainland Europe for strategic marketers (albeit very specific briefs), having already exhausted the pool of talent from within this region. 
  • Margins are being squeezed further.  Developers push the tier ones, the tier ones push the tier twos and so on.  With unemployment hovering at around 3%, the 10% pulled in from other EU states are important to the industry moving forward.  Leaving is likely to only drive prices up and up.
  • Not least, it has been widely reported that leaving would create a nervousness to business confidence.  This works both ways; construction stops building commercial buildings, incoming business moguls have nowhere to situate themselves in Britain.  A vicious circle ensues.

Go

  • In my experience most building products used for both commercial and residential projects derive from these shores.  OK, the dearth of bricks last year may have been plugged by imports, but in general terms, this is the case.  Conversely, I can think of three large manufacturers I work with who are targeted, in part, to satisfy orders into Central Europe.
  • Red tape from Brussels!  I doubt there is a need to explain this.  A client has recently taken the plunge, exporting into Central Europe.  Having recruited an Export Sales Manager and a French Country Manager (through me) they have found it draining dealing with the amount of legislation attached to trading with sister states.  Hang on, thinking about it, perversely would leaving the EU, make trading with non-EU countries a more pain-free experience? 
  • Although there is a certain amount of doomsayers who threaten that Brussels will close the doors on Britain exporting, would such a kibosh be in anyone's interests?

Either way, one thing is assured, my view is likely to move from middle to one of the extremes and back a number of times before voting day.  Having read a lot on the subject it astonishes (not surprises) me how many contradicting reports there are on the subject.  Furthermore, big hitters from within the same major corporates are finding it hard to agree.

I would love to hear others views on this, most important, of issues as I attempt to decide where to place my cross on June 23rd. mark.goldsmith@collingwoodsearch.co.uk

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Comments (1)

  • Tony Johnston Avatar

    Tony Johnston

    You have hit the nail on the head :
    The "debate" is more like a pantomime sequence or a Monty Python argument ...
    So much puffing and blowing from people who are plainly uninformed.
    No way to run a country or make an important decision !

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