Presidents Column October 2021

With the recent news of Cleveland Bridge going into administration, I remember back to a time in 1994 when I was a student at Imperial College. Over a period of a couple of days we visited Wards Structures, Cleveland Bridge and the Humber Bridge. My lasting memory was viewing the life size deck section that Cleveland had built as part of its work on the Tsing Ma Bridge in Hong Kong. What a shame that a UK company of that standing has failed.

Perhaps some government procurement teams should be challenged on why they seem to prefer using foreign steelwork contractors, when we have the required experience and capacity in this country to deliver quality steelwork for bridges. We all know that foreign governments will do everything they can to ensure their own steelwork contractors build their infrastructure projects, but our government procurement teams seem only to be interested in the basic cost, rather than value for money.

A study commissioned by the UK Contractors Group in 2012 found that £1 spent on construction output generates a total of £2.84 in total economic activity (i.e. GDP increase). In addition to the economic benefits, every £1 invested in construction provides financial returns to the Treasury in tax income and benefit savings amounting to £0.56. So, it could be argued that a tender price of £1bn with 100% UK procurement has a value to the UK economy of £2.84bn in GDP terms, and an effective cost of £0.44bn, whereas a similar tender price with 0% UK procurement has a value to the UK economy of £1bn and an effective cost of £1bn.

The exact numbers may have changed a little since 2012, but it still provides compelling evidence that UK government procurement strategy should support British industry, be it HS2, schools, the New Hospitals Programme, the renewable energy sector or nuclear.

We have the capability, capacity and engineering expertise to deliver these investment programmes, so let’s level up the UK rather than northern Europe, spend here, build here and reap the rewards for the UK economy. You only have to look at the projects featured in this issue that have been recognized with Awards, Commendations and Merits at the 2021 Structural Steel Design Awards to see the breadth and depth of talent that the UK steel construction sector possesses.

However, let’s not kid ourselves. We face challenging times with most structural steelwork contractors feeling the full brunt of sharp increases in material costs and sub-contractor’s costs. I suspect that most people have now built the new pricing reality into their future work, but I’m not sure how many of us can pass on the inevitable increases to overheads that all steelwork contractors will face in the next couple of years. All you have to do is look at is the unprecedented increases in PI insurance, the cost of electricity and gas, and the expected wage inflation aspirations of our employees to see trouble ahead.

In the face of such challenges, a supportive UK government procurement strategy would be welcome, and without it I fear that Cleveland Bridge may not be the last UK company of standing to fail.

Mark Denham
BCSA President