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limelight
THE NEW build
With astounding first-half profits, some of the biggest opportunities lie in emerging markets for the UK’s construction sector, writes Paul MacKenzie-Cummins
The UK construction industry is simply huge. Employing some three million people across a multitude of disciplines in more than 300,000 different companies, it has an annual turnover of more than £100 billion and accounts for almost 10 per cent of the UK’s GDP.
Despite being one of the sectors hardest hit by the economic downturn, output in the construction industry experienced its biggest rise since 1963 in the second quarter of 2010, with a jump of 6.6 per cent on the previous quarter, according to the Office for National Statistics.
With such a dramatic rebound from what had been a poor start to the year, the industry’s performance has exceeded even the most optimistic economic forecasts – stimulated by strong performances from some of the UK’s biggest construction firms. Balfour Beatty, for instance, has seen a rise of 32 per cent in first-half profit and has recently won a £460 million contract to develop a part of Heathrow Airport’s new Terminal 2 building. Meanwhile, house builder Taylor Wimpey has returned to the black to return a profit of £19.6 million for the first six months of the year, against a loss of £68.9 million a year ago.
Tempting though it may be to get over-excited about these latest figures, economists are erring on the side of caution. However, what is undisputed is the pivotal role the construction sector performs for the UK’s economic and social development. From improved transport infrastructure and sustainable development to enhancements in social housing, schools and hospitals, the construction industry’s all-round contribution and responsibility as one of the key economic driving forces to UK Plc cannot be underestimated. But it’s not just in the UK where the construction sector plays a prominent role. UK contractors, engineers, designers, and component and product manufacturers have a reputation that is second to none for working overseas.
MAINTAINING LEADERSHIP
Take Balfour Beatty as an example. Not only is it the UK’s largest international construction, engineering and services contractor, it is also the 19th largest construction company – and the numberone rail infrastructure contracting firm – in the world. With an order book standing at some £9 billion, more than half of Balfour Beatty’s revenue now comes from outside the UK, with in excess of 30 per cent generated by its operations in the US and a further 15 per cent from the rest of the world.
Carillion is another major UK player performing well on the world stage. Employing 50,000 people, it is one of the UK’s leading support services and construction companies, turning over some £5 billion with operations throughout the UK, Europe, Canada, the Middle East, North Africa and Caribbean.
But it’s not just engineering, architecture and commercial practices that are making waves overseas. Product manufacturers (Continued on page 38...)
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