North's construction industry faces one of its bleakest periods in many decades (Irish Times)

04 November 2011
There is a curiously unsettling sound coming from a growing number of building sites currently in the North. Where you would expect to hear the usual din of construction machinery and banter between workers, you are met instead by the deafening sound of silence.

This is usually the time of year when the construction sector picks up its tools in Northern Ireland after its annual two-week holiday at the beginning of July.

However, this year it is a very difference scenario for people who work in the sector and who had envisaged returning as normal to work this week.

Some of them simply will not have a job to return to. According to the "voice" of the North's construction industry, many workers have been given what is being termed an "extended break".

The Construction Employers' Federation (CEF) says it has evidence that construction firms are struggling to secure contracts to keep their workers in a job.

In an attempt to avoid laying off staff, some firms are now extending holiday periods to try to keep costs down. But the CEF is worried that this action will not be able to stall further job losses in the sector.

John Armstrong, managing director of CEF, believes the industry is facing one of its bleakest periods in many decades. According to Armstrong, the industry contributes nearly £1.5 billion to the North's economy each year. He says it is driven by small- to medium-sized firms which employ around 37,000 people. Armstrong says it is those firms which are facing a crippling level of pressure now and are at risk of going out of business.

He says a combination of rising costs and falling market demand has put the brakes on house building in the North. Armstrong warns that, unless urgent action is taken to stimulate the sector, many small firms will not survive.

The CEF has put together what it believes is a rescue strategy for the North's construction sector. It says initiatives such as encouraging banks and building societies to make it easier for people to obtain a mortgage would help enormously. It also wants the Government to step in and operate a scheme whereby it would purchase surplus new homes which have already been built and use them to alleviate the social housing shortage.

The CEF has also called on the UK government to reduce stamp duty for first-time buyers to give the market a kickstart.

The problem with the CEF's proposed initiatives is that although they come from the heart and would undoubtedly help the sector, they are unlikely to be universally adopted.

The fact is that house prices in Northern Ireland rose faster than anywhere else in the UK during the last decade. When there was a boom, no one heard the industry complaining.

Most industries in the North are experiencing a downturn at the moment. This does not detract from the situation the construction sector is in, but it is not alone. Many companies across a range of industries have been shedding jobs in recent months.

Northern Ireland's current unemployment rate stands at 4.1 per cent, a surprisingly healthy figure given what has been going on in the economy. But it is not going to stay that way, particularly if the downward pattern continues in construction.

Ulster Bank's Northern Ireland economist Richard Ramsey has highlighted the fact that the construction sector experienced the strongest growth rate of any of the main sectors in the North in recent years. He is now warning that there is no way this growth rate can be maintained.

He estimates that, over the last three years, 7,500 jobs have been created in construction-related industries. He believes it is surprising that with the falling level of construction output there have not been more marked falls in employment in this sector in the North. "It should be remembered that almost half of Northern Ireland's construction workforce is self-employed and this group is not included in the employee jobs figure. It is likely that the self-employed are bearing the brunt of the current downturn in the sector."

He believes the unemployment rate in the North will climb to 5 per cent by the end of year.

The CEF believes it is not just construction workers who will be directly affected. It says the knock-on effect of small firms going out of business will devastate the sector as suppliers also bear the impact of the slowdown. The outlook for the sector in the North is bleak - the holidays are definitely over as far as the building boom is concerned.