What is more precarious than a knife edge: The construction industry

21 May 2020

Covid-19 has wrought havoc everywhere and in everything that we do

Whether you subscribe to the conspiracy theorists that believe:

  • it was a deliberate global financial realignment instigated by the likes of Soros and Gates or;
  • a political strategy to limit personal freedoms or;
  • a manufactured attack by the Chinese to gain the upper hand on the world stage.

Or one of the other many possibilities including nature just doing what nature does, what is beyond doubt is that things are going to be pretty unfamiliar for quite some time. Work, holidays, jobs, school – suddenly everything is in play and nothing is impossible.

Construction industry woes

But for the construction industry, there are big worries. It is great that many sites are operating again. However, cashflow is going to be an enormous problem. Ours is an industry that has long had a reputation for poor payment as main contractors have often been accused of using subcontractors to effectively act as a source of working capital.

In spite of codes of conduct relating to payment terms having seen some improvement, Covid-19 is sadly going to place an unsustainable burden again on the supply chain.

It has already been reported that trades are being asked to take pay cuts – the very businesses least able to weather the current storm. This smacks of exploitation of those with the weakest negotiating position. Undoubtedly costs are going to rise as safer working practices are slowly established but if “we are all in this together”, we can’t allow a situation to develop where some are less together than others.

It must be acknowledged that main contractors are going to be facing enormous pressure as they start to mobilise teams and cope with projects being shelved. But surely, if their businesses were robust before Covid-19, they are the businesses most able to secure working capital from traditional lending routes or shareholders. To place the burden on the supply chain will create deep divisions and resentment.

If we get this right, even in these difficult times, hopefully the construction industry can emerge in a stronger state and we can finally start increasing productivity levels in a way that we have never experienced before. If we stick together, then who knows what we can achieve.

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