The construction market topography in Scotland changed significantly in 2017: The list of key contractors is now almost unbelievable compared with previous years. Strong former players such as Lend Lease and Laing O’Rourke, no longer exist in effective competitor terms; Morgan Sindall has been shrunk to a third of its former might; and Sir Robert McAlpine has been beset with project problems that has seen its headquarters retrench across the border to Newcastle. Changed days indeed.
Added to this, within the first month of 2018 Carillion, a quiet contender over recent years which had steadily reduced its size and presence to a minimal operating capacity, finally gave-up completely.
On the flip side, Robertson Group has grown from strength to strength with dominant regional bases in key territory hubs. Kier has also become increasingly successful over the last year and Grahams and BAM have also grown steadily. Morrisons (within the wider Galliford Try group) appear very dependent upon the Hub frameworks but this stop, start, steady as she goes approach is a relative victory in tumultuous, changeable times.
Balfour Beatty appears to have finally stopped reorganising itself and while always being a strong, steady player, lost a lot of talent during the dizzying multiple changes, however it has recently emerged to grow in size and competitiveness.
Bowmer & Kirkland appear to be on a steady growth path acquiring a fair amount of the talent that has become available in the market.
Following completion of the Queen Elizabeth University Hospital campus in Glasgow, Multiplex are near to finalising the Royal Hospital for Sick Children and Department of Clinical Neurosciences in Edinburgh, and while the University of Glasgow campus projects seem to have had a slow start, they are actively bidding on a number of west central Scotland projects.
And that in itself we believe, helps to explain one of the underpinning reasons for the change in the contractor market: there are not many current ‘major project’ opportunities in the Scottish region.
There are plenty projects that are in the sub £50m size category and businesses not mentioned thus far such as McLaughlin & Harvey, ISG, Clark Contracts and CBC and are arguably well positioned to capitalise on these and indeed already have. There are certainly opportunities out there for those who might wish to step-up to the plate. But for those holding out for the next ‘major project’? -Our recent conversations in the market would suggest to us that there is a reluctance for London-centric investors to back investment in Scotland with “aspiring tier one” contractors and decisions appear slow.
Disagree and complain some may, but investors have behaved with this kind of sentiment for generations and with the uncertainty around Brexit, the situation is only likely to continue over the next couple of years.
What this means for Scottish construction talent over the next year, will be subject of much debate. Those with ‘major project’ experience may be well advised to make a go of the opportunities in the ‘mid market’ and look to help the aspiring firms make their mark.
Is it going to be a happy and prosperous 2018? Nearly a couple of months in and views from many suggest it will a good but probably not a bumper year. Will it be happy? That’s harder to predict – it’s probably not going to be as grim as some may be feeling currently but it’s up to all of us to make of it what we will!Share this Post: