Social Housing unsurprisingly set to grow after Brexit
"According to recent construction market analysis by Glenigan, the amount of social housing planning applications increased considerably in 2019 despite the political and economic turmoil which plagued the year, especially in December with the Snap General Election.
Specifically, Glenigan’s market research has found that there was a 14 per cent increase in the number of applications to construct social housing in 2019, when compared with 2018, and the number of housing units that were being applied for was actually 18 per cent higher than 2018......for more news click here
The UK has a huge political focus on Modern Methods of Construction (MMC), Mark Farmer believes we have a real short to medium-term need for imported market disruption by world leading and proven offsite manufacturers. Our own thought process after visiting many of the worlds most productive factories (50) there is room for many no doubt including the UK homegrown OSM's if they are able to raise to the challenge? However we have to be realistic to be able to hit government targets, clearly not doable without the overseas OSM Super Powers. By all means build factories in the UK to accompany 3-4 existing serious players (full to the brim with production capacity), thereby continue to invest but without deliverable scaleable proven 'product' as yet the current UK 'cottage industry' will still not be able to cope with such vast numbers. Encouraging news of course to see Homes England supporting Ilke Homes but the net result is a mere dot on the landscape home numbers wise. Many small factories have 'best intentions' to build hundreds or thousands of houses, yet cash strapped dreaming of investment to come any day with very little experience compared to mature overseas mega-plant - who have a constant stream of scaleable measurable orders. The PQQ information from our UK clients cancels immediately any opportunity for the majority of homegrown OSM's on the basis of lack of experience and a weak balance sheet.
Combine the worlds OSM's production capacity available for the UK in collaboration with UK delivery partners then we stand a chance of impact towards solving our housing crisis. However there are many overseas OSM's nervous of the UK worried about a number of issues including required profitability, unknown risks in a volatile market - this needs careful tactical supply chain management building sustainable relations with assurances & collaboration support working with local delivery partners therefore result.
I would estimate 60% of Baltic OSM's are not willing to risk working in the UK, 30% not suitable which leaves just 10% 'potentially' approachable to build at scale. It's been a long journey to ascertain and build our robust supply chain. The next question is would these overseas OSM's be interested in expansion to the UK?
Which brings only challenges including workforce where as the Baltic's are leaning towards foreign support from Ukraine and other Eastern European workers, none of which would be able to enter the UK and are far cheaper to employ. The cost and time of setting up new factories is far more complicated than most can imagine, building a factory is one thing, bringing to full profitable capacity delivering sustainable quality and constant flow of orders is the serious challenge where many fail. Operating outside their comfort zones and local markets is highly unattractive to most.
Myself living in the Baltic's building these trusted relations around 60% of the time has taught me there are huge cultural differences and trust issues across the Baltic region yet alone the rest of the world. Living in London we live and breath the international incredible dynamism which is impossible to describe let alone the pressure endured. It's easy to get wrapped up in the hustle and bustle, but the reality is another story getting property deals over the line let alone securing suitable supply chain willing to engage.
A factory's take on this is that just the want to fill production, spare the long stories - they are incredibly selective the projects and clients they take on veering towards large successful customers not start-ups or small developers.
From an international trade basis, I am thinking of all my personal friends from many nations (Baltic, Russian, Ukrainian, Turkish, Albanian, Asian, African etc) contributing majorly to our economy concerned about Brexit and the relevance to them - London in particular is unique, prosperous and has a ongoing huge construction need, some open to international solutions. We have an incredible strong economy and well respected multi-cultural environment despite what anybody says concerning the negativities of our departure of the EU. I am incredibly positive having spent what I consider sufficient time with our investor friends in London of late with plans for building thousands of homes the next 5 years across the Country indeed Ireland.
The North, forgotten totally by Westminster is also going through tremendous change thankfully, Government realising it is critical for inclusion and our Prime Minister considering moving the House of Lords to York emerging as a frontrunner to house the upper chamber. Being half Yorkshire half London I welcome this initiative. Whether this is a reality will be telling but the intention is there to take the North more seriously for what is an incredible power house. Building this Northern Powerhouse is about boosting the local economy by investing in skills, innovation, transport & culture, as well as devolving significant powers and budgets to directly elected mayors to ensure decisions in the North are made by the North. Government are backing business growth right across the North, and giving our great cities the power and resources they need to reach their huge untapped potential.
Conservative Party chairman James Cleverly confirmed the plan was being considered in Downing Street after reports emerged that the prime minister had ordered officials to look into the practicalities of shifting the Lords outside of London, words aside at least he is trying. The Independent recently reported "The prime minister is believed to be keen to take advantage of plans for the restoration of the crumbling Palace of Westminster, which already requires some 800 peers to another building for six years from 2025."
Wrapping up this blurb, there has been far too much hype in the national and trade press with MMC incorporating Modular attempting to provide a solution via the UK which is impossible. The government need to support even lead this evolution creating cohesion with genuine support for what is a critical issue for our industry indeed homes built falling short by just over half of the annual target of 300,000 homes. Modular is no cheaper product wise, the savings are made in program time and it is about time we stopped talking about it and got on with it.
International collaboration is the key to success with smart procurement delivery not 'penny pinching' with build cost, screwing over supply chain, enduring LA red tape & therefore losing momentum reverting back to traditional build. Meanwhile people are homeless, or living in temporary accommodation costing the government Billions, in this day and age it is totally unacceptable.
