Regional focus: South East

Whether you are working in niche markets or as a one-stop shop, things are very good in the South East. Too good perhaps. There are clear signs of overheating with too many firms chasing too few able managers. And the ones who are in post are working very long hours.

According to many, the area is unique for the number of people at their desk at the crack of dawn. At least one managing director admits to working a 7am till 8pm day - "but you enjoy it".

Colin Baker, construction director of Kier's Crawley office, points out:"At 6.30 in the morning you are in the rush hour. We have sites where people are in at 7am." His colleague Peter Searle, construction director at the Aylesford office, says the industry tries to beat the rush hour at both ends. "I have turned up on site at 7.30 am and there are no parking spaces. But if you walk around a site at 5pm, you are on your own."

Paul Brazier, regional managing director of Overbury, the office fit-out specialist, admits to being at his desk at 6.30, and able to enjoy thinking and planning time in peace. His firm has enjoyed a bonanza from his mainly blue chip clientele, who are still spending last year's budgets on big schemes, but if the current nervousness from the sub-prime market fallout continues, there will be a move to what he calls 'bad news work' where companies downsize and need to smarten up their space to sublet.

At Inspace, where the focus is primarily on affordable housing, chief operating officer Chris Durkin admits people are working very long hours. "My office would be more than half full at 8am with most working a minimum of nine to 10 hours."

Work/life balance

Like many, he concedes there is little work/life balance in the South East at the moment, largely because of the lack of good managers and the need to keep quality up. "There is huge demand and such a shortfall of people that they stretch their working week to plug the gap."

The Kier team are enjoying booming workloads in retail, hotels, leisure and commercial building. The public sector is equally buoyant via the South East Centre of Excellence, the area's council conglomerate. Some niche markets are also busy says Baker. "There has always been a steady workload from the public schools as theirs is quite a competitive business. After all, if you are charging £20,000 in fees, you have to stay on top with facilities like sports halls and nine-hole golf courses."

What's called the Gatwick diamond area has a lot of growth - Kier has just begun a 220-bed hotel in Crawley town centre and the mid-Sussex towns are now being expanded because of the government's housing programmes. Ebbsfleet is expected to benefit from the enhanced Eurostar service and Manston and Broadstairs are likely to grow. Kent County Council is hoping to replicate the development that followed the building of the M4 with its M2 and M25 improvements and the new bridge at Sheerness.

In Brighton, a major planning permission has been granted for a statement building including offices and residential and at least one tower. Margate is set for regeneration and there is also the huge amount of support infrastructure for the Thames Gateway housing development - hospitals, schools, police stations and other public infrastructure.

Willmott Dixon chief operating officer John Frankiewicz points to his firm's burgeoning workload in education and healthcare. The Kent BSF is the biggest plum at the moment and is currently the subject of a two-way fight between Willmott and Skanska, with the outcome due by the end of the year. But he is critical of procurement methods that tie up lots of useful staff on 'winner takes all' schemes and leave the second past the post empty handed. "I don't think a long procurement route has served the industry totally well. We are fighting for resources and talent and the loser's time is lost on schemes that won't be used. But every local authority has its own procurement route and you have to do a lot of research on each one's needs."

Traditionally, southern contractors relied on their friends in the North to boost their numbers - how many project managers do you know from Scotland? But with workloads equally buoyant elsewhere in the country (and Manchester allegedly working fit to bust) there is no sign of the cavalry coming over the hill.

At Morgan Ashurst, Rob Leitch, its regional managing director for special works, says he can still call on structural steelwork and cladding trades from up north. "They do a four-and-a-half-day week and work extremely hard," he says, but admits there is a downturn even in them.

Galliford Try Construction South managing director James Armitage is chasing cladding and curtain walling skills. "Getting these subbies is a problem: it is capital intensive so they can't build up capacity quickly," he explains. It's a pity overseas subbies aren't pitching for this kind of work, although Armitage sees signs of more overseas contractor interest from the likes of Bouygues and Pelican.

So everyone is trawling the universities, getting the message out at the schools and twitching their noses at the tide of agency CVs crossing their paths.

Kier is using its foundation degree from Thamesford Hall as a way of getting people in and on the craft side. It is using the First Start programme from the Learning and Skills Council in Kent, which gets 14- to 16-year-olds out of regular schooling two days a week into college and later on site, giving them an early start in the industry.

Everyone is also snapping up East European operatives - the Poles have a good reputation for high quality and a good work ethic. Jag Paddam, managing director of the infrastructure business unit at Morgan Est, has recruited a few Poles as managers. His workload is high at the moment: tenders have been submitted for the M25 widening and the A3 Hindhead. But the rail system is where he thinks a lot of future work will come, as the government prefers it to roads because of its environmental credentials.

Paddam is also optimistic about growth from water and sewage to support residential growth, new hotels and the Olympics. "We are more than halfway through AMP4, the five-year framework for procurement, with AMP5 starting in 2009/10. OFWAT will require higher standards so we will see changes in how much is procured." Power stations will also be enhanced to meet growing needs.

Engineer recruitment via universities is a longstanding headache, made more searing by the changes in the skills needed. "Clients are getting contractors involved a lot earlier, so we need a different breed of engineer who can change mindset from construction to strategy design and resolving client objectives," says Paddam.

The trend towards bringing construction expertise in early ties up resources. Mark Blake, business development director at Capita Symonds (CS), notes that the fallout from the sub-prime market debacle means banks are reviewing their plans. One of their clients, a major continental bank, has put the brakes on a cluster of schemes it had planned, but it didn't want to lose the CS team seconded to it, so is paying to keep them in place.

Flexible workloads

Blake firmly believes the way forward is to spread activities across both public and private sectors and across workload types, while ensuring the workload is flexible and able to cope. His bugbear is contractors who "still price everything that comes through the door - if things get tough they are exposed and if they do not turn work away that is where there are problems".

An unexpected challenge is also the nimbyism in the South East across all developments. In housebuilding, there is resistance to planning applications that increase densities because people fear it will reduce the value of their properties. In schoolbuilding, it is also proving hard to get permissions, as Morgan Ashurst's Leitch explains: "There are hesitancies when local elections are due. Education can be sensitive and the expansion of local schools can deter local residents."

Most agree that even if house price increases slow following the sub-prime/Northern Rock (and the rest) debacle, there will still be plenty of need for homes in the South East because of the unmet demand which is likely to keep housing associations and their contractors like Inspace busy for many years.

Willmott has just won a large regeneration project in reading called Dee Park, for which it will build nearly 800 homes over nine years. "I think some of what we are seeing is a reality check in the private housing market," says Durkin, "because it has been very strong for a long time and could not go on for ever because there is huge under-supply."

His biggest constraint on growth is people, he says. You can't get the good quality managers. At CS, Blake agrees. Agency poaching is driving him mad, but he has one crumb of comfort. "A number of our people who have gone to other firms have come back within three months because what they were promised has not materialised."

But then again you can't blame them for trying. He is getting junior staff poached for what he calls 'silly money', 50% to 100% increases in their salaries. Mind you, when you work it out, being there 24/7 probably cuts the hourly rate dramatically.

But short-termism by staff in pursuit of big wads of cash doesn't compensate for interesting and prestigious work. "Those climbing the ladder must have access to big, complicated projects," says Blake, "and they won't get them everywhere." Frankiewicz believes one way forward is to recruit from the consultants and from clients, especially to enhance preconstruction skills.

In spite of all the headaches, people profess to love working in this area. Kier's Colin Baker believes: "You have to be sharp to succeed in the South East". Mark Blake wouldn't go anywhere else. "I love the South East. I have had opportunities to work in senior positions out in the provinces, but I didn't want to. I like the buzz."

Employment
	2005	2007

Senior & executive managers	1,330	1,410
Business process managers	9,210	9,440
Construction managers	32,830	33,510
Office-based staff (excl managers)	31,160	31,890
Other professionals/technical staff & IT	6,360	6,520
Wood trades & interior fit-out	32,510	33,240
Bricklayers	10,030	10,730
Building envelope specialists	10,870	11,620
Painters & decorators	15,130	15,950
Plasterers & dry liners	6,430	6,640
Roofers	3,960	4,250
Floorers	6,630	6,800
Glaziers	7,720	7,500
Specialist building operatives	8,840	9,180
Scaffolders	1,710	1,880
Plant operatives	4,790	4,930
Plant mechanics/fitters	3,770	3,900
Steel erectors/structural	2,800	2,920
Labourers	9,550	10,270
Electrical trades & installation	22,880	24,010
Plumbing & HVAC trades	23,700	25,430
Logistics	3,270	3,560
Civil engineering operatives	7,970	8,590
Non-construction operatives	30,130	31,090
Total	293,580	305,260
Construction professionals & technical staff	34,070	35,550
Total	327,650	340,810

	UK % share	South East % share
Public housing	3	2
Private housing	15	14
Infrastructure	7	6
Public non-residential	9	8
Industrial	5	4
Commercial	18	15
Repair and maintenance work	44	51
Note: *2006 is an estimate

Expert view: Christina Montague, south east regional strategic adviser

The Construction Skills Network forecast indicates that the South East leads the UK construction industry with 14.7% of its output and 13.4% of its employees. Output is expected to grow by 3.2% a year on average between 2007 and 2011, ahead of the UK average of 2.6% but behind Greater London, Northern Ireland and the East of England. Construction employment is projected to increase by over 12% in the same period.

Average annual growth is strongest in public and private housing, at 7.7% and 7.9% respectively. The 2006-2009 South East Regional Housing Strategy has identified a considerable shortage of affordable housing, indicating a likelihood of significant activity in public sector housing, while a strengthening market and forecast underlying demand suggests continuing upward pressure on new house building in the private sector.

New work is forecast to grow by 5%, whereas work in the repair and maintenance sector is only set to grow by an average 1.3% a year, dampening overall growth in the South East as it represents 51% of all construction output in the region.

Construction employment in the South East should reach 382,000 in 2011, representing a 12.1% increase on 2007 levels and a rise in its share of total UK construction employment from 13.1% in 2007 to 13.5%. Growth in trade employment is forecast to reach 12.7% in 2011, much stronger than for professionals (7.5%).

Annual growth in recruitment of 4% on 2007 levels is required on average to meet anticipated demand in the South East. This works out at 13,560 new construction workers each year, including 1,840 for wood trades and interior fit-out, 1,770 professional and technical staff, 1,630 for electrical trades and installation, 1,350 construction managers and 1,290 other office-based staff.

One of the biggest challenges in developing the necessary skills in the South East is the relatively high level of self-employment in the industry and the migratory nature of the workforce. But the new Skills Academy initiative that focuses on a site-based approach will help address this challenge by focusing on training through the supply chain.

The first Academy site in the South East launched last month in South Ashford, Kent on a major residential regeneration scheme and will see the construction of 442 homes over a five-year period. Further Academy sites will follow in the region over the next few years and with the take up of ConstructionSkills grant-aided training plans in the South East up by 87% in the last year the prospects for addressing skills issues in the region are very encouraging.

ConstructionSkills is already working on the forecast for 2008-2012 which will be published early next year.

For more information visit www.constructionskills.net