Rocky road ahead

The aggregates industry may still be grappling with the fall out from the Aggregates Levy, but it's soon going to have another, potentially far more costly problem to deal with. The Working Time Directive (WTD) comes into effect in March 2005, and it will restrict lorry drivers to a 48-hour week, with a maximum 10-hour night work limit. Conservative estimates put the cost of the impending directive to the quarrying and aggregates sector at £300m a year - minimum.

Yet these cost implications seem to have been ignored by the wider construction industry - even though it seems certain that aggregates firms will have to pass the extra cost on to customers.

Not surprisingly, it's an issue of great concern to the Quarry Products Association (QPA).

"The problem in our industry is that it's very much haulage based and we often have drivers on duty for 60 hours or more a week," explains QPA's economist Jerry McLaughlin. "A big part of that time consists of waiting - it's not all driving - because they usually have to queue to get on a site and then there could be a delay before the material is ready to be unloaded. But the WTD covers the whole time they're on duty so they can't say they're only driving for 35 hours and waiting for 20 - it's all included.

"This means that there is going be a necessity to reduce overall duty time to 48 hours a week, which creates an interesting dilemma. In order to manage the haulage we'll need more drivers to carry out the work, but the problem is that there's an existing shortage of hauliers nationally and it isn't just our industry who use hauliers," he continues.

"So in addition to trying to deal with the implications of the WTD for our business, we'll also be competing for a pool of drivers with other industry sectors and trying to find drivers from the diminishing number still available."

A working party carried out an analysis for the QPA based on how many drivers there are, what they do every day and what they won't be able to do with the new restrictions. They estimate that the extra cost will be around £300m a year to the industry, though McLaughlin describes that as a "minimum" amount. "I anticipate it will be a lot more," he adds.

McLaughlin doubts that many people are aware of the implications of the WTD, particularly in the construction industry.

"Virtually everything on a construction site gets there by lorry, so the implications for construction as a whole are very significant. I can't imagine what the cost to the construction industry will be, but if it's £300m for us then its got be billions for construction," says McLaughlin.

Set in stone

Asked if industry can lobby government on this matter, McLaughlin answers "no" because it was agreed back in 1993. "There will be some consultation on the detail but the actual fundamentals of a 48-hour week will happen. It's been a long slow burn from the 1990s so it has not generated much awareness. Our main activity now is to inform and prepare our members as best we can, and also to try and ensure that other customer and client groups are aware of it. Projects will have to start being planned with this in mind."

The only points that have scope for consultation are how the reference periods of what makes up the 48-hour week are calculated, and also the definition of night time hours.

"We'd like to have had the night time distinction made earlier, because the trouble is a lot of quarries are operating well before 7am so you want to get the materials on site early," explains McLaughlin. "This is significant because one of the issues you hear from clients and the government is that they want more construction contracts carried out at night. Obviously if you have a greater night time working restriction then it reduces the scope for enabling that to happen."

The QPA feels that government isn't fully aware of the cost implications of the WTD, but it is in talks with the Department for Transport, which has set up a working party to look at the implications for the road transport sector. McLaughlin adds that they will also be making the Treasury aware of the cost implications because "we don't want the Aggregates Levy increasing on top of this".

Changes to working practices

So what can be done to reduce the impact of the WTD?

McLaughlin suggests that aggregate and quarrying companies will have to change their working practices. "A lot of work will have to be done to make the haulage process more efficient so as to avoid people driving around in empty lorries or waiting at sites for long periods. Companies will basically have to find ways of using their vehicles more efficiently."

Cost is going to be the main impact, and will be passed on to all customers, including contractors, says McLaughlin. "The cost will have to be passed on because accessing the appropriate transport will cost more. Fewer drivers and more opportunities to work in other sectors will result in drivers costing more to hire. It's going to be the equivalent of the cost increase experienced by the introduction of the Aggregates Levy."

The Transport and General Workers Union has already launched a campaign to ensure its members receive the same pay for a 48-hour week as they do for a 60-hour week when the WTD comes into force in 2005. The Road Haulage Association says employers can only pay what they can afford, but it would appear that the hauliers are going to be the ones in a position to charge what they like for their services.

A common misconception about the WTD is that it only applies to employed drivers and not self-employed. "Although the majority of hauliers in our business are self-employed, the definition of employed and self-employed within the WTD are very tight, so it means virtually all drivers will be classified as employed for the purpose of the directive," explains McLaughlin.

"If you're working on any kind of regular basis for a company, then within the WTD, you're classed as employed. They've drawn the definitions very tightly in order to try and mop up as many drivers as possible and not leave any loopholes."

Industry reaction

Most aggregates firms seem aware, and concerned, about the likely impact of the WTD. Aggregate Industries has a working party looking at the impact of haulage on its business and better ways of delivering materials to make it cost effective.

"A lot of our haulage is done through contractors and self-employed drivers so we don't directly employ them, but we are going to have to change the way we contract hauliers. The amount of time spent waiting on sites will definitely have to be reviewed," says Steve Tagg, head of UK human resources at Aggregate Industries.

One of his biggest concerns is the review of the WTD opt outs due to take place by the end of 2003.

The WTD became law in the UK in October 1998, but a loophole existed that meant workers could opt out of the 48-hour ruling by working 'voluntary hours'. The clause is not expected to be renewed as Britain is in a minority of 14-1 within the EU on this issue.

"A lot of our workers work in excess of 48 hours a week so if they are suddenly limited to the amount they can work it will have a huge impact on their ability to earn a decent wage," explains Tagg. "We are starting to gear ourselves up to flexible working practices and are piloting an annualised hours scheme throughout this year, but the problem is that in order for the scheme to work we need more people and as you know, there is a big shortage of skilled workers."

There will be an estimated shortage of 80,000 drivers in the haulage industry by 2005. "It is certainly a big concern for us and the extra costs we'll have to pay to hauliers for their services will have to be passed on to our customers," concludes Tagg.

Cedric Hollingsworth, managing director of Leicester-based Midland Quarry Products, says his company is currently evaluating various options as to how it can restructure its haulage arrangements.

He agrees with McLaughlin that not many construction companies are aware of the cost implications the WTD is going to have.

"We cannot possibly absorb this cost so it is going to have to be passed on to all our customers," says Hollingsworth, who is also chairman of the QPA's working party on the WTD. "The important thing is that our customers are aware that this extra cost is coming."

Like Tagg, he points out that the industry needs to recognise how the WTD opt outs review could affect everyone.

"We believe the government will ask for a two year lead-in for the removal of the opt outs which will mean it will happen at the same time as the road hauliers exemption expiring," explains Hollingsworth. "It will be a double whammy that will have huge cost implications for the whole of the construction industry." n