President’s Column: February 2022
The legacy of Covid is still causing problems, there is still a significant amount of money that has been artificially put into the system by most western governments. This is causing additional demand. The consequence of this additional demand is that we are now seeing a relatively high inflation level at over 5% and this will lead in turn to an increase in wage expectations and an increase in interest rates.
In management circles some analysts talk about Covid causing “the great resignation”, but it might be better put as “the great migration”. Quite a few employees have retired after considering their financial position. However, in the main, there aren’t enough employees to fill vacancies in companies during normal times, never mind boom periods, and what we are seeing is employees just moving from company to company.
They are moving for more money in a boom market, but whether it’s the end of this year, or the next year or the year after, the excess money in the system will dry up at some point and the mini-boom will end, there will be a correction.
We have seen unsustainable material increases and supply issues during this boom period, but there are already signs that demand is cooling a bit and it’s noticeable that our supply chains are coping with the slightly reduced demand levels. Although the UK media is inwardly focused at the goings on at the largest party venue currently in the UK, at No 10 with DJ Boris in residence, the rest of the world’s media seems more interested in what might happen in the Ukraine and Taiwan.
Let’s hope common sense prevails and these tensions dissipate. I think what we all need is a significant period of stability in pricing and supply of the products we purchase, so that the amplitudes of the peaks and troughs of our workloads stabilise. Everybody seems to be very busy on the face of it, but it’s not constant, there are gaps and significant delays that cause problems to the industry. One could argue that the industry has always been like that, yes it has in a way, but the magnitude of the ups and downs in the market seem to worsen.
Steel prices will most likely need to increase due to energy prices. In addition, increases in steelwork fabricator costs will sooner or later need to be passed on to our clients as well as material increases. I suspect, as yet, many fabricators are just trying their best to pass on material increases and have not yet fully addressed their own rising costs which are inevitable.
One other thing that I wanted to bring to your attention, it is not only bridge fabricators that are quality assessed for RQSC. All BCSA members are assessed and awarded RQSC status and, in a time when the industry is being criticised for a lack of quality, we think members’ RQSC status should be more recognised by the industry as a whole. The BCSA will be helping to communicate the value of RQSC to our clients over the next couple of months.