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two The challenges of a growth market

The supply chain is the engine room of the industry. Without an integrated and fully supported supply chain, then the opportunities we are talking about will not be available to us.

So where are we? We’ve experienced the longest, deepest recession of our careers. It has had a big effect on this industry, starting in 2007. House building was immediately affected, moving on through property development to government- sponsored schemes. As a result of six or seven years of serious recession, the supply chain has taken a major step down.

There have been over 4,000 administrations and receiverships, and 18,000 liquidations. So when we consider the kind of targets we have to hit in pretty short order, we’re starting from a very low base. That must be a concern for all.

As insolvencies tail off, there’s a risk of supply- chain businesses taking on too much, too quickly. Without the right funding this can lead to overtrading and, ironically, a spike in further insolvencies.

With house-building already coming back, skills shortages have been generated. We’ve had shortages too of bricks and timber. This is the kind of thing we can expect to see more of as we continue to drive forward through growth. We have lost thousands of skills. Signifi cant redundancies took place between 2008 and 2010. How can we move now to address the growth that’s coming?

We’ve already seen signifi cant shrinkage of output of materials, such as base metals. The mining industry, globally, has been subdued for three years now. When we need these materials on- site in 2016, have we got the end-to-end supply chain resolved? What will happen to pricing of materials? What is our contingency if things get even tougher? Supply-chain management is key. Industry-wide solutions are called for.

Martin Kelly Director, KPMG in the UK

© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.



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