Brexit – The show goes on…
If nothing else, the lead up to Brexit has been entertaining, with daily headlines screaming out the latest complication. It was never going to be a straightforward deal and while some politicians may be confident of a positive outcome, it’s fairly certain commerce and industry don’t agree. Between all the political wrangling there is a still a great deal of uncertainty of what the final deal will look like and the impacts it will have on the UK economy. As the deadline looms closer the response from various sectors and industry role players has been interesting.
Supply chain impacts
Many Tier One Contractors have taken an approach of stockpiling materials to mitigate future price increases in the supply chain. But organisations will only be able to stock pile so many materials for so long. After that they will have to decide how they’re going to mitigate or factor in the inevitable price increases.
When Brexit comes into effect, the costs along the supply chain will be impacted in at least two ways. Firstly materials from the EU will now be subject to import tariffs and customs duties. Secondly there will be additional administration involved which will involve hiring clearing agents.
A third variable is factoring the cost impact of the time delay that materials will now be subject to. Project manager and procurement managers will need to factor this into their timelines and plan accordingly so that construction is not held up by materials not arriving on site when they are needed.
It has been suggested that technology can play an important role in helping contractors with this transition. Supply chain software that integrates customs regulations can streamline the process and make sure that all the boxes are ticked, helping project managers stay on top of things.
Impact on the workforce
The question of changes to the immigration law as was one of the most hotly debated questions in the Brexit negotiations. With the UK construction industry relying heavily on skills and expertise from the EU, new immigration laws could have a potential negative impact.
While there are those saying that the UK could benefit to stricter immigration laws as it would make more jobs available for locals, the reality is that there aren’t queues of tradesmen or labourers lining up to become construction workers. Similarly on the engineering, technology and operations management level, the UK already has a shortage of senior level skills. Hiring expertise from the EU was one way to fill this gap, but following Brexit this is going to become more difficult to do.
Yes, industry role players need to make a concerted effort to stimulate skills in construction and promote the industry to attract skilled people from other sectors, but this isn’t going to happen overnight. For now the EU remains a valuable source of much needed expertise but companies will need to prepare themselves for more paperwork in order to be able to access it.
Lack of industry agility
The construction industry is notoriously slow to adapt and change. This is evidenced is several areas of business that seem to remain firmly entrenched – from late payments to the gender pay gap. Outdated policies that have a negative impact on business and the industry as a whole are still being carried out, with seemingly little concern of the consequences. When market factors are favourable and business is good, perhaps ignoring these factors could be excused. But the industry does not have that luxury currently, and it could be exactly the seemingly small changes that could make the biggest difference.
Diversity supports productivity and profitability according to a 2018 McKinsey & Co report. Bringing in a broader range of expertise into management can help streamline organisations and make them more productive. Create opportunities for women to move into senior roles and benefit from their expertise as well as contribute to decreasing the gender pay gap.
Technology is the driving force and enabler of change. There are many tools available that can help main contractors become more effective and more efficient in all areas of business. Technology can process data much faster than any human and provide detailed reports at the click of a button. Project management and collaboration is made that much easier when everyone can access the information they need on a central project database.
While all of these things need to be taken into consideration. Perhaps the most important thing is recognizing that organisations need to position themselves for change. That needs to be the starting point for management strategies and it needs to become part of the organizational culture. There are so many uncertainties ahead, especially with Brexit looming. The businesses that will have the best chance of not only surviving the storm, but emerging stronger, are those who respond well to change.