Any analysis of the UK construction industry will tell you two things. Firstly, it’s ailing. Secondly, it’s ripe for disruption.
Despite being worth £110 bn as a sector, it suffers from low margins, poor productivity and demographic trends which appear almost insurmountable. The veil of uncertainty created by the UK’s decision to leave the European Union can only add to the sector’s headaches.
Up until now, the UK has relied on a steady supply of labour from Europe to plug gaps and prop up its home-grown labour force. That may no longer be the case with Brexit looming.
The profile of the domestic labour force is aging rapidly. In 2011, it was estimated that one in every five UK-born construction workers were aged over 55, meaning that by 2021, those people will nearly have reached retirement age. Almost half the labour force is self-employed indicating a tendency towards short term.
Off-site manufacturing of homes offers a solution and an opportunity to disrupt and ultimately enhance the sector. Putting labour under cover and in a secure, organised environment should mean improved quality. Indeed, that is what has been found so far at Pocket Living where over 30% of construction output is now delivered through off site solutions.
There is no shortage of housing demand over the long term. London alone requires a 66,000 homes per annum based on planned forecasts. This should make investors sit up.
My prediction is over the forthcoming years more capital is going to move into this nascent sector. Aligning the construction sector with a manufacturing mindset will embed a culture of continuous improvement and bring significant productivity gains through a more sequenced and refined approach to the assembly of homes.
So the uncertainty around Brexit might actually be a positive trigger in this regard. For the UK to deliver affordable homes in the future it can no longer carry some of the inefficiencies associated today. Expect new technology, expect new methods and expect more disruption.
