Regional construction focus: North East

A raft of major new infrastructure schemes and education projects are keeping North East contractors lucky enough to be on the frameworks in positive spirits. Grant Prior explains what work is to be won in the first region to be re-rated by the ConstructionSkills Network.

The North East is the first region to be re-rated by the ConstructionSkills Network as the current economic turmoil forces experts to revise recruitment predictions across the industry.

The figures are usually published every February, but the sudden downturn has led to a re-drafting of the numbers as workloads continue to plummet.

Terry Hanlon, Construction-Skills regional strategy adviser for the North East, says: “Figures have been re-calculated to provide an interim indication of the impact that the credit crunch is having on the construction sector’s skills needs.

“On a national level it is important to note that despite a slowdown in some sectors of the market, the industry will continue to grow over the next few years and we will still require at least 42,000 new recruits every year between 2009-2013 for the whole of the UK.”

That will certainly be the case in the North East where a raft of major new infrastructure schemes and education work is keeping contractors ticking over.

Huge projects suach as the New Tyne Crossing (see panel below) and a proliferation of Building Schools for the Future jobs mean decent order books for firms lucky enough to be involved. But for those on the outside looking in the current downturn is proving grim.

Distorted market

Kier Northern managing director William Kay says: “The market in the region has been distorted by the amount of BSF work. Contractors that have secured BSF work in areas like Durham and Gateshead are finding themselves very busy. The market has split between those that have benefitted from BSF and other frameworks and those in the normal market place.

“It’s a very different world for contractors on frameworks and those that are involved in regular bidding in the traditional competitive market.

“We have got a foot in each camp at the moment. Around 60% to 70% of our work is from frameworks and repeat business with key account clients. The rest is in the normal market place which is very, very competitive.

“National contractors and local firms are all competing with each other. We try to walk away when the competition forces bids too low – but you have to balance that with the need to keep your resources ticking over.

“We’re seeing client tender lists of six, seven, eight or nine bidders and at that point you have to question whether it is good business sense to go against so many competitors. We are in a situation where we don’t need to tender, but we have a business to sustain.”

GB Building Solutions is another contractor pinning its hopes on public sector cash as privately funded projects dry up.

The firm is on the Northumberland County Council education framework, which should provide primary school work for the next five years.

Regional director Andy Hall says: “We are working on five schools in Blythe in addition to BSF schemes for Durham County Council.

“You have to put a lot of time and effort into procuring framework deals and you need to understand the politics and the processes.

“Our Northumberland framework director is virtually based in county hall. It’s difficult to break into because you need a different mentality, but on the back of this we have set up a General Works Business to carry out smaller capital works of £2m
and below.”

Supply chain

Hall is also keen to keep trade contractors onside despite the downturn. He says: “We look at working with our supply chain – we don’t want to put people through the bear pit.

“We work with our suppliers and have a list of five or six in the ten key trades that we look to use in the first instance.

“Some ex-residential subbies are coming into the market cheap, but you have to be very careful of firms buying work. It’s not a place that we want to go.”

Recruitment for the right candidates is still a competitive market in the region. Pamela Lindsay-Dunn, regional director of Hays North East, says: “Because of the number of very large public projects going ahead nothing has really changed in terms of premium skills shortages.”

Infrastructure boom

Infrastructure work worth hundreds of millions is planned for the north-east with site work officially starting last month on one of the biggest projects of them all – the £260m New Tyne Crossing.

Main Contractor Bouygues Travaux Publics has spent the last eight months preparing the 3km-long site for the start of work on a second vehicle tunnel under the River Tyne and refurbishment of the existing vehicle tunnel which opened in 1967.

The new tunnel will be built using mainly traditional cut-and-cover techniques with two small sections in Jarrow using the sprayed concrete lining method to avoid the need to re-route utilities.

The second vehicle tunnel will link East Howdon in North Tyneside with Jarrow in South Tyneside, completing the dualling of the A19 between Northumberland and North Yorkshire.

It is being built just downstream of the existing tunnel. Once both tunnels are fully operational,
the new tunnel will carry traffic north to south and the existing tunnel, currently carrying vehicles in both directions, will carry vehicles south to north. Construction is due to be completed in December 2011.

The project is a Private Public Partnership. Concessionaire TT2
will be responsible for the part-financing, design and construction of the new tunnel, and for the operation and maintenance of all the tunnels under the river, including the Grade II-listed pedestrian and cycle tunnels.

The Concession will run until 2037 after which all the tunnels will be handed back to the Tyne & Wear Passenger Transport Authority.

Other associated works include a new toll plaza, extension of the tunnel portals in Jarrow, construction of a new ventilation shaft and a new interchange connecting the A19 and the local road network via slip roads south of the Howard Street bridge.

Trevor Jackson, managing director of tunnels Concessionaire TT2, says: “I hope local communities will share our pride in seeing the scheme come to fruition – this is, after all, their scheme. I would like to think they can be proud not only of the final product and of the difference the new crossing will make locally, but also in the way it is delivered.”

Transport in the North East also got a boost from the Government earlier this year with the announcement of a £400m funding package for a range of schemes including a major revamp of the Tyne & Wear Metro.

Around £300m will be spent to upgrade the tram system, plus £98m towards Sunderland’s
plans for a new crossing over the River Wear.

Sunderland’s plans for a new crossing consist of building a new four-lane multi-user bridge between Claxheugh and Castletown to accommodate road traffic, pedestrians and cyclists.

Main construction work will potentially begin in late 2011, with completion in Spring 2014.