Regional focus: Wales: The Welsh dragon flexes its wings

It is said that Wales is the 'thief of ambition' because people who work there forget all about climbing the greasy pole to success and stay put.

Contractors concede that Wales is a great place to live and if the ConstructionSkills forecast comes good it will be an increasingly busy place to work, particularly in the south. Midas boss Alan Hope was quoted recently saying that its Affordable Housing arm is chasing a five-fold increase in size in part by pushing out its geographical boundaries to South Wales.

But at the moment working there is quite a challenge. Partly it is the result of framework deals that ringfence local work and keep outsiders out. The other challenge is geographical. The Principality divides into three areas: the south-east - Swansea, Cardiff, the home of the Welsh Assembly, and Newport, where traditionally most economic activity takes place central - primarily agricultural and north Wales - which is more closely aligned with the North West of England, particularly Liverpool and the Wirral.

Colwyn Knight, managing director of Castleoak Care Partnerships, a care homes builder that operates from Cardiff, says the lack of a motorway network between the north and south means his workers can be in London just as quickly as they can drive to north Wales.

Aberthaw power station

For civil engineering contractors such as Jones Brothers, the problem can be acute. It has a major project on the Aberthaw power station in the South that takes five hours to reach from its north Wales base.

Otherwise, it has found civil engineering work "pretty steady", says director John Dielhof. His firm has seen turnover rise from £12m in 2000 to £28m now. It has had a run of wins on highways and other infrastructure work with a series of £3m to £4m contracts, many for the Welsh Assembly. In addition, it has built a reputation in wind farm construction, starting with the Cefn Croes, the 39-turbine scheme in mid-Wales that was the largest of its kind in 2004. Now it is on the preferred list for a scheme in north Wales. "We expect wind farm development will be one of the things that will take off because it is one of the targets for the Welsh Assembly on sustainability," he says.

Dielhof admits Welsh Assembly work is very attractive, steady and low risk, therefore, the company does not need to ratchet up its costs by buying additional insurance cover. But he is wary of becoming too dependent and prefers to ensure Jones Brothers can offer a variety of skills - highways, coastal, marine and landfill. "If you concentrate solely on local government work you leave yourself vulnerable," he says.

Like many Dielhof is wary of traditional tendering rounds that have six or more contractors competing - the odds are stacked against individuals succeeding. As several contractors commented, that seems to be more common in some parts of Wales. Dielhof is grateful that although the landfill industry is competitive, the tender lists are mercifully short.

He also likes prequalification bids, which keep bidding costs manageable.

His greatest wish is for the powers that be to shorten the time between winning work and starting on site. "It can take up to six months because of planning processes and environmental restrictions," he says. "It puts teams on hold for a long time, so you then have the headache of trying to find a short contract starting now to keep them occupied, which is a real balancing act."

Continuous workload

At the smaller end of civils is JU Bowen, which has a turnover of £3m to £5m. Its director Vernon Davies is delighted that this year has turned out to be so much better than last, whose summer was, he says, "the worst I have ever known".

Most of its work comes from utility firms Welsh Water and Severn Trent, both of which are pushing out more work than in the past.

"They seem to be looking ahead more than they had been and have programmed their work so we have a continuous workload in the next six months."

In the care homes sector, Castleoak is finding clients outside Wales much more receptive to its way of building care facilities it provides a service of feasibility studies, buying the site, arranging the planning permission, building and fitting out. Away from Wales, registered social landlords and housing associations are keen on this kind of package. In fact, Castleoak has just won a project for housing association Shaw in Acton, London, even though Shaw has its origins in Wales. But back in Wales clients are less keen on buying into the whole package, preferring the traditional route of appointing builders themselves.

There are other challenges to working in the Principality, says Jon Salt, Capita Symonds' (CS) regional director. He has found that joining some of the supply chains in initiatives such as Procure 21 did not produce the workload promised. The health sector work it traditionally did has dried up now that a pan-Wales framework agreement has been won by Interserve, HBG and Laing O'Rourke. Bidding for PFI contracts is horrendously expensive so contractors have to buy in a consultant's help in bid preparation, which keeps out all but the big guys, but can help firms like his that have an architectural consultancy side.

Lucrative areas

But their workload is buoyed up by the Quinn scheme in Newport - an old liquid gas plant that has been taken over for a new radiator plant and insulation facility on the site - which is proving lucrative. At Cardiff Bay CS is working on a Toys-R-Us building. What's more, energy seems to be flowing back to the hotels sector, which fell dormant after 9/11, Salt says. "Prior to that we had very major hotel clients and were doing a significant amount of hotel work. Slowly it is coming back."

In particular, he cites the Celtic Manor complex at Newport that it built for Terry Matthews, a local electronics entrepreneur who is alleged to be Wales' only billionaire. A 600-bed, 5-star complex, it boasts four golf courses that will host the Ryder Cup in 2010. Although it was finished nearly four years ago, CS is regularly invited to add more, latterly a conference centre.

Salt knows his bosses want him to meet annual growth targets of 10%. His current turnover is around £9m on the architectural side and £5m on the multi-disciplinary side. The firm is always on the acquisition trail, having gobbled up four architectural practices in the last two years it is hungry for more and has a menu in its sights.

Brian Drysdale, Willmott Dixon's (WD) managing director in Wales, has found most of its work coming from the public sector. More than half its workload is education, with a huge schools upgrade programme additional to the Building Schools for the Future initiative. Drysdale has enjoyed the challenge of the Technium building programme under which high quality education buildings have been designed as a catalyst for regeneration of the area and a boost to public building. Willmott Dixon has carried out schemes in Baglan, Carmarthen and Swansea among others.

Drysdale also notes the push for both research and IT buildings at both Swansea University and Haverford West. Similarly, there are quite a number of leisure and art centres going up in Cardiff and Newport.

On the private sector side WD has been busy with waterfront apartment building in the south east, but now the work is falling back. Retail remains strong and it has work for Marks and Spencer in Neath and a distribution centre for Wilkinson in Magor, plus a Waitrose in Cardiff.

Drysdale is able to capitalise on WD's in-house expertise with BREEAM [BRE Environmental Assessment Method] requirements on sustainability to help win public building work let under the Sustainable Wales initiative. "The work put into the design and building is a lot higher than the norm. We have BREEAM assessors and environmental managers. We also do things like post-occupancy evaluation," says Drysdale.

That level of attention to detail is not common, but shows the firm is prepared to check the outcome and learn from it.

Staff retention

For everyone in Wales the biggest headache is getting and keeping staff. WD has single-source arrangements with trades that give it certainty of workload because the company is turning over £90m a year or so. What's more, quality improves when the same trades regularly work together.

"There is a lot of peer pressure to improve in this situation because the carpenter knows each plasterer and each decorator and they are familiar with each other's working methods," says Drysdale. The failure of one has a strong impact on the rest.

They also agree that Wales is a hard area to get into. Clients want firms that come and stay, not fly-by-nights. Colwyn Knight wishes Castleoak could win more work in Wales - most of the staff is Welsh and they and he usually have to hike off around the UK all week. "So I really look forward to coming back," he says.

Employment
	2007	2011

Senior & executive managers	170	190
Business process managers	3,160	3,380
Construction managers	6,070	6,460
Office-based staff (excl managers)	5,340	5,570
Other professionals/technical staff & IT	1,520	1,600
Wood trades & interior fit-out	11,690	12,770
Bricklayers	3,940	4,620
Building envelope specialists	4,270	5,000
Painters & decorators	5,880	6,550
Plasterers & dry liners	2,270	2,410
Roofers	1,310	1,420
Floorers	2,020	2,180
Glaziers	2,440	2,580
Specialist building operatives	3,660	3,970
Scaffolders	920	1,100
Plant operatives	2,020	2,180
Plant mechanics/fitters	510	590
Steel erectors/structural	1,960	2,080
Labourers	7,530	7,960
Electrical trades & installation	3,850	4,030
Plumbing & HVAC trades	6,390	6,880
Logistics	1,640	1,780
Civil engineering operatives	4,080	4,460
Non-construction operatives	11,170	12,550
Total	93,810	102,310
Construction professionals & technical staff	8,770	9,350
Total	102,580	111,660

	UK % share	Wales % share
Public housing	3	2
Private housing	15	16
Infrastructure	7	13
Public non-residential	9	10
Industrial	5	6
Commercial	18	14
Repair and maintenance work	44	38
Note: *2006 is an estimate

Expert View: Donna Griffiths, Wales, Regional Strategic Adviser

The Construction Skills Network forecasts a 2.5% a year growth in construction output in Wales between 2007 and 2011, in line with the UK average of 2.6%. This reflects parity in economic activity, where GVA (gross value added) is forecast to rise by 2.7% a year in Wales and the UK. The projected growth in construction employment for the period is almost 9%, slightly below the expected overall growth in output, which therefore suggests productivity is expected to rise.

Growth in repair and maintenance output is forecast to exceed growth in new work in Wales, but only by a small margin. This is mainly due to work starting in 2009 under the £1.5bn Welsh Housing Quality Standards programme.

The private commercial sector is set to show the most growth between 2007 and 2011, with an average annual increase of 4.2%. South Wales in particular will benefit from significant regeneration schemes in Newport and Swansea, the St David's 2 shopping centre in Cardiff, and a number of redevelopments of old industrial sites for mixed use.

Infrastructure and public non-residential sectors are expected to have annual growth rates above 3%. Infrastructure growth will be driven primarily by work on the Milford Haven LNG site and additional road projects, while the public non-residential sector will benefit from the six-year, £1.2bn Welsh NHS Trusts investment programme. Other significant projects include the Heads of the Valleys programme, a 15-year, £500m regeneration strategy developed with five local authorities utilising £140m of Welsh Assembly government funding, creating a number of jobs.

Construction employment in Wales is projected to top 111,600 by 2011, an 8.8% increase on 2007, with particularly high growth in trades (9.1%). This will involve the recruitment of around 5,090 workers a year. It will include 870 recruits for wood trades and interior fit-outs and 520 for professional and technical posts. This represents the highest relative recruitment increase of any area and one that will pose real challenges to training providers in Wales.

But there is a strong culture of training in Wales that will help to meet recruitment needs. This is clearly demonstrated with the Welsh employers' take-up of apprentices - there has been a record level of apprenticeship placements this year. Other training schemes include Construction Job Match, where employers sign up to a construction training charter that demonstrates their commitment to employing local people, promoting equal opportunities and meeting the local needs of the construction industry.

In addition, contractors such as those working with the Family consortia, a group of housing associations set up to tackle the Wales Housing Quality Standard, have committed to gold level CSCS by the end of the year. CSCS and its affiliated schemes provide the evidence that cardholders have the required skills and health and safety knowledge to carry out their job.