THE CAUTIOUS WAIT FOR BETTER TIMES

Hall and Tawse is constructing new student accommodation at the new University of Derby under a œ2.5 million design and build contract. Work on the campus includes the construction of a new concourse building including restaurant, coffee bar and six shops. Work is due to be complete in phases, the final opening being next month. Why be in London when you can locate your office in the East Midlands? With the M1, the M6, the M42 and now the A1/M1 Link converging in the area, the locals reckon no part of the country could be better served.

As one local firm put it - the East Midlands is 'geographically sensible'.

This is the pitch that local contractors are using to sell the area and help attract business to the delights of Nottingham, Derby and Leicester. Because if they can bring firms in, then that will lead to more construction work for all - in the commercial and industrial sector, in small time civils and in housebuilding. More workers need more homes.

In many areas, the pitch is working. Toyota is already at Derby (though see over), the Inland Revenue is building a new hq in Nottingham and British Gas has a spanking new state of the art office in Loughborough, Leicestershire.

And they are being followed by the next wave of business - German and American discount retail outfits are impressed by the infrastructure, while the motorway network is perfect for attracting shopping havens with supermarkets, M&S, Comet and, of course, a drive-through McDonalds. Take the ads for Leicester's Fosse Park, for instance - 'so convenient! Just half a mile from Junction 21 of the M1.'

With all these advantages there is unsurprisingly an upbeat mood around the area - tinged with a touch of caution.

'The East Midlands is leading the industry out of the recession,' says Jean Thomas, marketing director of Hall & Tawse Eastern. But, she warns, there is a way to go yet.

Indeed the East Midlands feels like an area that is about to take off, but has not quite got the confidence for that final push. On the building front there is work available, albeit at very competitive prices. The civils firms, on the other hand, are struggling that bit more.

'We have got to wait for the building boys to pick up before we can really benefit,' says Howard Easton, managing director of Leicestershire-based Charles Gregory Civil Engineering, part of the Miller Group.

His type of firm - œ16 million to œ17 million turnover, 200-plus employees - has found the recession very tough, and the outlook for the smaller and medium-sized civils teams is still bleak in the East Midlands with too many firms still chasing too few jobs.

'There has been uncertainty with the setting up of the new Highways Authority and the Transport Supplementary Grant was very low last year. Add to this the Local Government reorganisation and the end of the water companies' first tranche of spending, and things are tight. Some of the smaller jobs are ticking over but the larger projects are held up.'

Easton's firm is one of those affected by changes in the way clients package their contracts with the new emphasis on bigger schemes (see lead story, CJ, 18 August). Local authorities, in particular, are causing difficulties by lumping winter and summer maintenance work into the same term contract to help their direct labour organisations survive the Government's demand for compulsory tendering of work.

Easton feels the move to compulsory competitive tendering has actually worked the wrong way with medium-sized firms losing more work.

The pressure, therefore, is from all sides. But being an East Midlands firm does have its advantages - the firm can try to expand geographically in every direction.

Easton says: 'What we are doing is casting our net wider to try to win more work. We have a good reputation so we do not struggle to get onto tender lists. We are moving into Worcestershire and Warwickshire, and south Yorkshire, as well as working in Wales and the south west. We have to expand our area to get on.'

If Easton is waiting for the local building market to take off then there is some hope - but he should not necessarily hold his breath. Local building contractors report that they are busy - but margins are tight and they are not sure if the good times are really coming back for good.

Terry Crich, construction director of Nottingham contractor Thomas Fish and Sons, says: 'There are glimmers of hope. We are certainly busy and there is work about - but whether this is long term or not I don't know. And certainly what there is has to be gained at very competitive prices. The area has suffered with all the mining closures which have affected all local industry and it may need Government help to get going again. But the East Midlands is definitely starting to look attractive again with sensible land prices which should attract new firms which in turn will encourage others to come.'

Fish - with a œ12 million turnover - competes regularly with Hall and Tawse which has its Eastern office just across the city on the Derby Road. Like Fish, Hall and Tawse competes primarily in the œ1 million to œ5 million sector. As a rule the firm will not go higher or commit itself to projects longer than 12 months - to do so requires main board approval.

'It may be an old saying but we believe in 'profit for sanity - turnover for vanity",'says group marketing director Mike Smith. 'I think some of the bigger firms have forgotten what they are in business for. The Eastern office is perfectly placed to pick up just the sort of contracts that we need.'

The advantage of the East Midlands is the proximity of three large cities - Nottingham, Leicester and Derby - all requiring buildings to serve large communities. At present the best example of this is work for the five local universities - Nottingham and Leicester plus the three new ones, Leicester's De Montfort, Nottingham Trent and Derby.

'Take Derby, for example,' says Mike Smith. 'They are spending œ12 million in three years increasing student accommodation from 2,500 to 12,000 as part of the change to University status. And Nottingham Trent is building too.'

Fish's Crich has also enjoyed work from the universities: 'The student side has certainly been quite good to us over the past two years - and that work came exactly at the right time.'

And it's not just the universities which keep things ticking over. All three cities have major hospitals which need their catering facilities updated under new Euro guidelines and a multitude of schools and leisure centres which have to be built and maintained. This is vital bread and butter work for the local firms as it is generally that bit too small for the big contractors.

And although the big firms win much of the work for the big local football teams - premiership clubs Leicester City (Sir Robert McAlpine) and Nottingham Forest (Taylor Woodrow) and lower division teams Notts County (Mowlem) and Derby County (Laing) - the smaller firms do benefit from the millions being invested in the stadia.

So there is some hope for the East Midlands construction industry which may filter down to the civils teams to see them through. And this will be a blessed relief.

Jim Crane, md of small local contractor CR Crane and Co, knows the East Midlands market well. His grandfather Charlie Crane set up the firm in 1910 and it has stayed as a small family unit working almost exclusively in the East Midlands. Jim Crane has not seen many worse times than the last few years. He says: 'We have lost some big names here in the last few years. It has been really tough - we have found that the industrial and commercial sector has pretty much disappeared altogether. What is left is so intensely competitive and everyone - from the architect down - is being screwed down, which results in ridiculous contractual set-ups and poor project information. I think the traditional method of contracting has gone now.'

Crane started building some houses last year, but that work is on hold until things pick up. A successful line in church and monument restoration keeps things ticking over. He, like the bigger firms, is cautiously hopeful about the future. 'Yes, things are improving - I think. We certainly got fairly excited in the spring when people dusted off their schemes and started ringing us. But that has levelled out again. We'll have to wait and see.' Wait and see....wait and see. That is the name of the game in the East Midlands. 'We just need people to have a little more confidence and we are away,' says Crich. 'Everything is in place to go around here.'

East Midlands continued - see over.
The Taylor Report's insistence that top football grounds should be made into all seaters has given the East Midlands a handy mini construction boom. Taylor Woodrow - having built a new stand at Nottingham Forest's City Ground in 1992 - is erecting a second stand at the ground at the moment. Across the Trent Mowlem has totally rebuilt Notts County's ground, while Sir Robert McAlpine last year completed a œ5 million new stand at Leicester City. Derby is having a new stadium built in the city by Laing which is expected to be constructed in Pride Park.