Table of Contents
Executive Summary
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- The market
- Sector growth impacted first by Brexit, now by COVID-19
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- Figure 1: Forecast construction market compared with expectations prior to COVID-19, 2019-24
- Temporary impact on housing, but Government targets are challenging
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- Figure 2: Forecast new housing construction market compared with expectations prior to COVID-19, 2019-24
- Commercial construction strongly disrupted by COVID-19
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- Figure 3: Forecast new commercial construction market compared with expectations prior to COVID-19, 2019-24
- COVID-19 has mixed impact on industrial construction
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- Figure 4: Forecast new industrial construction market compared with expectations prior to COVID-19, 2019-24
- Public non-residential construction subject to change in government attitude
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- Figure 5: Forecast new public non-residential construction market compared with expectations prior to COVID-19, 2019-24
- Short term impact of COVID-19 on R&M
- The impact of COVID-19 on construction
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- Figure 6: Expected impact of COVID-19 on construction short, medium and long-term, 29 April 2020
- Companies and brands
- An unusual industry structure
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- Figure 7: Number of companies active in construction, 2014-18
- Figure 8: Composition of the main trades sector, 2018 (number of companies)
- The importance of sole traders and micro companies
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- Figure 9: Employment profile of the construction industry, by size of company, 2018 (000s employed)
- What we think
The Impact of COVID-19 on Construction
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- Short, medium and long-term impact on the industry
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- Figure 10: Expected impact of COVID-19 on construction short, medium and long-term, 29 April 2020
- Opportunities and threats
- Impact on the construction market
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- Figure 11: Forecast construction market compared with expectations prior to COVID-19, 2019-24
- How a COVID-19 recession will reshape the construction industry
- COVID-19: UK context
Issues and Insights
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- How will post-COVID-19 demand for construction change?
- The facts
- The implications – offices
- The implications – retail
- The implications – entertainment
- The implications – warehousing
- The implications – public spending
- The implications – housing
- The implications – R&M
The Market – What You Need to Know
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- Construction has a volatile reputation
- COVID-19 will have very sector-specific long-term impact
- Public spending change in attitude
Market Size
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- Doubling of growth in 2019
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- Figure 12: The construction market, 2015-19
- Figure 13: Comparison of new construction and R&M output, 2015-19
Market Segmentation
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- Sector-specific development
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- Figure 14: Segmentation of new construction activity, 2019 (£ billion)
- Figure 15: Segmentation of R&M activity, 2019 (£ billion)
Segmentation: Housing
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- Private sector growth continued to slow in 2019
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- Figure 16: Segmentation of new housing construction output, 2015-19
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- Figure 17: Housing completions, by sector, 1946-2019
- Years of fragmented policies
- Unusual supply profile
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- Figure 18: Housing output segmented by size of company and target market, 2019
Segmentation: Commercial
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- A sector susceptible to recessions
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- Figure 19: Long-term trend in private commercial construction, 1970-2019
- Output slipped in 2018 with some recovery in 2019
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- Figure 20: Commercial construction output, 2015-19
- Sector trends varying
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- Figure 21: Segmentation of commercial construction output, 2015-19 (£ million)
- Micro and medium-sized companies have a strong role
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- Figure 22: Commercial construction output segmented by size of company, 2019
Segmentation: Industrial
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- Strong growth again
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- Figure 23: Long-term trend in private industrial construction, 1970-2019
- Brexit induced growth?
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- Figure 24: Industrial construction output, 2015-19
- Warehousing boosted by Brexit
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- Figure 25: Segmentation of industrial construction output, 2015-19
- The SME opportunity
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- Figure 26: Industrial construction output segmented by size of company, 2019
Segmentation: Public Non-residential
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- Spending restraint
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- Figure 27: Long-term trend in public non-residential construction, 1970-2019
- Government policy changing
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- Figure 28: Public non-residential construction output, 2015-19
- Growing education and health spending
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- Figure 29: Segmentation of public non-residential construction output, 2015-19 (£ million)
- Enterprises lead the market
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- Figure 30: Public non-residential construction output segmented by size of company, 2019
Segmentation: R&M
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- Overall activity
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- Figure 31: R&M output, 2015-19
- Private housing R&M
- Market plateauing
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- Figure 32: Private housing R&M output, 2015-19
- The micro-company mainstay
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- Figure 33: Private housing R&M output segmented by size of company, 2019
- Public housing R&M
- Government policy restricts market
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- Figure 34: Public housing R&M output, 2015-19
- Enterprises command largest market share
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- Figure 35: Public housing R&M output segmented by size of company, 2019
- Non-residential private R&M
- Reduced growth in 2019
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- Figure 36: Private non-residential R&M output, 2015-19
- Micro-companies take pole position
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- Figure 37: Private non-residential R&M output segmented by size of company, 2019
- Non-residential public R&M
- 2019 market growth
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- Figure 38: Public non-residential R&M output, 2015-19
- All industry sectors involved
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- Figure 39: Public non-residential R&M output segmented by size of company, 2019
Market Forecast
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- COVID-19 to strongly reduce activity in 2020
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- Figure 40: Forecast construction market compared with expectations prior to COVID-19, 2020-24
- Housing – Government targets are challenging
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- Figure 41: Forecast new housing construction market compared with expectations prior to COVID-19, 2020-24
- Commercial construction has long-term impact from COVID-19
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- Figure 42: Forecast new commercial construction market compared with expectations prior to COVID-19, 2020-24
- Mixed fortunes for industrial construction, post COVID-19
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- Figure 43: Forecast new industrial construction market compared with expectations prior to COVID-19, 2020-24
- Public non-residential construction to grow after COVID-19 impact
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- Figure 44: Forecast new public non-residential construction market compared with expectations prior to COVID-19, 2019-24
- Short term impact of COVID-19 on R&M
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- Figure 45: Forecast R&M construction market compared with expectations prior to COVID-19, 2020-24
The Impact of the Economy
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- UK GDP flat in Q4
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- Figure 46: UK GDP growth rate, 2012-19
- COVID-19 could cause record fall in economy
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- Figure 47: Range of forecasts of the COVID-19 impact on the economy, 2020
- Business investment and confidence suffering before COVID-19
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- Figure 48: UK business investment, £ million, Q1 2015-Q4 2019
- Figure 49: UK ICT investment, £ million, Q1 2015-Q4 2019
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- Figure 50: ICAEW UK National Business ConfidenceTM index, Q1 2014-Q1 2020
Market Trends
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- The environment
- New methods, materials and off-site locations
- Robotics
- Use of SMEs
- Digitalisation
Market Drivers
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- Economic uncertainty, Brexit then COVID-19
- Government policies
- Skills shortages
Companies and Brands – What You Need to Know
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- A very unusual industry structure
- Huge disparity in profitability
- Industry reacts to expectations
- The skills issue
Industry Structure
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- Growth in numbers
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- Figure 51: Number of companies active in construction, 2014-18
- The industry composition
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- Figure 52: Composition of the main trades sector, 2018 (number of companies)
- Figure 53: Composition of Individual trades, 2018 (number of companies)
- The importance of sole traders and micro companies
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- Figure 54: Employment profile of the construction industry, by size of company, 2018 (000s employed)
Competitive Strategies
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- Many issues to tackle
Company Profiles
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- Balfour Beatty
- Activity
- Performance
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- Figure 55: Financial performance of Balfour Beatty, 2015-19 (£ million)
- Strategy
- Barratt Developments
- Activity
- Performance
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- Figure 56: Financial performance of Barratt Developments, 2015-19 (£ million)
- Figure 57: House completions by Barratt Developments, by region, 2018-19
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- Figure 58: House completions by Barratt Developments, by unit type, 2018-19
- Figure 59: House completions by Barratt Developments, by deal type, 2018-19
- Strategy
- Interserve Group
- Activity
- Performance
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- Figure 60: Financial performance of Interserve Group, 2014-18 (£ million)
- Strategy
- Kier Group
- Activity
- Performance
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- Figure 61: Financial performance of Kier Group, 2015-19 (£ million)
- Strategy
- Persimmon
- Activity
- Performance
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- Figure 62: Financial performance of Persimmon, 2015-19 (£ million)
- Strategy
- Taylor Wimpey
- Activity
- Performance
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- Figure 63: Financial performance of Taylor Wimpey, 2015-19 (£ million)
- Strategy
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Methodology
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