The latest Scottish Construction Monitor survey by the Scottish Building Federation (SBF) revealed despite consecutive quarters in which the industry's confidence was rated at +2, confidence has now fallen this quarter to -5.
Reasons for the fall include growing fears over the future pipeline of new work. Despite official statistics show strong output across many sectors of the industry over the year to March 2017, the majority of these are made up of major infrastructure projects, contributing overall output to under £3 billion or more than 20% of the total.
Compared to the 12 months to March 2007, infrastructure contributed less than £1bn - equivalent to 8% of total industry output.
Elsewhere, the housing sector of the industry contributed 19% of total industry output during the year to March 2017, whereas in 2006/07 output was more than 25%. Output from the private commercial sector of the industry has dropped from 25% in 2006/07 to 18% in 2016/17.
-- Advertisement --
With major infrastructure projects such as the Queensferry Crossing and the Aberdeen Western Peripheral Route starting to come to an end, employers are worried the industry will suffer a major contraction due to an apparent shortage of other work to fill the gap.
SBF President Stephen Kemp said: "Many building employers are increasingly nervous about the future prospects for our industry. There is a feeling that the underlying fundamentals of the industry are not nearly as strong as record output figures might suggest. We know that a period of record output from major infrastructure projects such as the AWPR and the Queensferry Crossing is about to come to an end. Strip away those numbers and the performance of other key sectors of the industry such as housing and private commercial don't look that strong.
"As that infrastructure work dries up over the next year or so, we could see the industry suffer a real shock. Levels of industry employment, which have been very slowly recovering, could slip into reverse. I think that is what SBF members are now worried about – hence the reason why industry confidence has declined.
"In reality, the local community and economic benefits provided by these large infrastructure projects are limited. To ensure the long term health of the construction industry and the wider Scottish economy, the Scottish Government now needs to focus on supporting smaller scale projects throughout Scotland. Such a strategy will help to sustain building SMEs that are the real drivers of employment and economic added value in Scottish construction. Without this, we could be facing a cliff edge that tips the industry – and the wider Scottish economy – into recession."
(LM/MH)
