Diversification In the UK Construction Industry

We might all be hoping for a recovery but unfortunately it looks to be some way off. However there may be a silver lining as the western world begins to recognise that economies driven by credit fuelled consumer spending may not be the way to go after-all! There’s a real need for a diversification strategy in the construction industry as well as the wider economy.UK Prime minister David Cameron said in his speech at the conservative party conference this week that Britain needs to get ‘making things again’ which to me seems finally to be a recognition that the economy needs to undergo a fundamental re-balancing.Our Skewed EconomyUnbelievably, consumer spending currently constitutes approximately two thirds of UK GDP. With the strain on household spending power (as a result of the cuts/crunch) likely to continue for a number of years we are left with little hope of a quick return to the good times. It’s a real shame therefore that, as it stands, we don’t have the option to turn to our manufacturing sector in order to export our way back to prosperity having spent the last forty years dismantling it.Whilst things aren’t going to change over-night, in the longer term, the re-balancing and diversification strategy that Cameron alluded to presents opportunities for the construction industry. Reviving our manufacturing sector will require the construction of new infrastructure, warehousing, factories, and plant facilities for example.A revival in the Industrial sector would be a good thing for the UK construction industry. Every consultancy and contractor has some involvement in industry projects; it’s simply that these teams have been overshadowed in recent years by the size and growth of commercial and property teams.Balancing ConstructionMany firms in the industry that have suffered redundancies have done so because of their over reliance on the ‘boom sectors’ that subsequently have turned to bust. The effects could have been alleviated had these firms been better diversified across sectors. At the same time it makes sense to go where the work is, and so for the construction industry to be better diversified it must come as a follow on from better diversification in the economy as a whole.So we’re in for a painful few years yet but if they lead to a sound diversification strategy being put in place that leads to a better balanced construction sector as well as the economy as a whole then this can only be a good thing for the future.