The Regional Economic Taskforce has recognised the need to support the West Midlands construction industry as it continues to struggle in the recession. Under the stewardship of the West Midlands Centre for Constructing Excellence (WMCCE) the building blocks of an action plan have been put in place to help take the sector forward, pulling together and identifying initiatives and support that need to be both coordinated and communicated.
Since the plan's inception, actions confirmed as available now for construction businesses across the West Midlands region are:
* Bridge Loans via Advantage West Midlands “(AWM)”'s Transition Loan Fund
* Gap funding for major construction work to continue via Advantage West Midlands’ Development Gap Funding Scheme
* WMCCE and Business Link West Midlands helping contractors to bid for work (eg.,for London 2012 Olympic construction work)
* Subsidised apprenticeships for construction firms
* Homes and Communities Agency's (HCA) Kick Start programme to help unlock housing schemes affected by the credit crunch.
The Action Plan initiative follows pleas from West Midlands Business Council and proposals from members including the West Midlands Developers Alliance, the Royal Institution of Chartered Surveyors and WMCCE stakeholders. The full plan is still being worked out and will remain flexible to respond to changing circumstances but West Midlands Business Council (WMBC) has praised the Minister for the West Midlands, Ian Austin MP for responding positively.
George Marsh, chair of WMCCE, who also chairs the Construction Action Plan Taskforce, said:
“The construction industry was one of the first to be hit by what has turned out to be one of the worst recessions in living memory and it is still hurting. There was a strong feeling that we were being seen only in terms of bricks and mortar, not professions, jobs and livelihoods.
“Firms continue to struggle, some major names have gone out of business, and there is clearly a way to go yet before we see a concerted rebound. Many sites and development schemes are still mothballed, offices and other types of commercial property stand empty, with developers very cautious in their outlook and funding organisations reluctant to commit. Whilst there is some recruitment, there are also significant redundancies and short-time working still occurring.
“The Government has done its best to stimulate public sector projects and keep some capacity in the sector, but we felt much more had to be done.
“What we are putting together is a framework for recovery, with the public and private sectors working in partnership. Already substantial progress has been made and we are confident it will make a difference.”
Debbie Walsh, WMBC board member and the Royal Institution of Chartered Surveyors (RICS) head of regional policy and communications, added:
“In current conditions, access to finance and cash flow are very often the biggest issues which cause construction companies to go under.
“Finance arrangements are extremely difficult and in some cases unsustainable. Material suppliers are failing on a daily basis due to bad debt provision. Hire companies have also seen a fall in demand and the supply chain is now a key focus for cost shedding, which in turn leads to lay-offs.
“These new measures are designed to bolster the battered finances of companies who it is vital we retain if the industry is not to be left threadbare when the upturn comes.
“We put our case direct to government, appearing before the Minister's Regional Economic Taskforce. The construction action plan has developed from there. While it is not yet in final form, we are getting on with ensuring implementation of what has already been agreed because time is of the essence if we are to stem the job losses and the company failures.
“Construction firms’ cash flow problems need to be addressed via soft loans now.”
Hence, in conjunction with regional development agency AWM, the existing Transition Loan Fund can provide bridging finance to nurse firms through the worst of the crisis.
“This is particularly important for contractors working on public projects where cash flow can be critical,” cautioned Mr Marsh.
Development gap funding is also still available for construction businesses. Last year AWM announced that it was providing a £48 million package which was expected to trigger £192 million of new, high-quality commercial and industrial development opportunities in the region by 2013, schemes that might otherwise be financially unviable in the tough economic climate.
Assistance from £100,000 to £9 million is available to private sector developers – a similar push which ran in 2006 saw £34 million of public sector finance lever in approximately £160 million of private sector investment.
Mr Marsh said: “AWM's gap funding operations have been an undoubted success – this is not the time to knock it on the head. It is vital it continues while the sector remains in distress.”
Continuing efforts to provide information and support to companies about London Olympics 2012 opportunities are designed to further boost order books.
As to apprentices, it has been agreed that there should be a further drive to sell the key benefits to employers. In addition support would be offered to “displaced“ apprentices – many have had their dreams of a career dashed – via industry matching services.
“The potential loss of apprenticeships could be very damaging to the future of the industry,” said Ms Walsh.“We must give new hope to these young people and both retain and increase our skills base.”
A further move would see the dissemination of case studies and good procurement practice between local authorities in order to make it easier for firms to bid for public sector contracts, and to ensure that local sourcing and employment is emphasised.
The full construction action plan is expected to be out by the end of September.
Businesses interested in accessing this help now can do so by calling Business Link West Midlands on 0845 113 1234.
For more information on Homes and Communities Agency's (HCA) Kick Start programme please visit http://www.homesandcommunities.co.uk/kickstart_housing
