The global economy is reeling from Donald Trump’s ‘Liberation Day’ but there are ways for the building engineering sector to turn a negative into a positive, writes BESA chief executive officer David Frise.
Donald Trump’s tariff-driven approach to international trade has echoes of the economic chaos that reigned during the Depression era of the 1930s. Despite all historical evidence to the contrary, he believes imposing what is effectively the largest ever tax in US history will turn the clock back and boost investment in domestic manufacturing…but the world has changed.
We no longer live in a closed ‘mercantile’ world dominated by the need to balance trade surpluses, but a much more open free trade one where the best goods and services can be easily sourced from the best and most efficient suppliers.
That should give our industry hope as we look for ways to weather the current economic storm, and a way forward as we try to remain focused on the things we can influence.
In 2023, the UK exported £60.4bn worth of goods to the US, but more than double that in services – consultancy, financial etc. These are not produced in the factories of Trump’s ‘vision’ but are provided by skilled people and, importantly, are not subject to his tariff war.
Globally, we run a large trade deficit in goods (over £200bn last year) but that is almost balanced out by our service-sector exports. The sun set on the British Empire decades ago and our manufacturing sector declined but, as Trump may well find, you can’t turn back the clock. The UK gradually reinvented itself as a services ‘superpower’ and that puts us in a relative position of strength in the current chaos.
Advantages
Looking specifically at building engineering services, we have some significant advantages because of our ability to add value in sectors that are (as much as possible) recession proof. This includes exponential demand for data centres, pharmaceutical production and research facilities, life sciences laboratories, energy transition, and also defence.
Not only are these sectors continuing to build with confidence, but they are also heavily reliant on high value m&e engineering to provide clean room conditions, resilient close control cooling, water and energy efficiency, etc. In many, the services represent upwards of 60% of the value of the overall project and, in a growing number, the m&e provider is taking the role of lead contractor.
This upends the traditional supply chain structure that has characterised construction for decades and which is, in large part, responsible for repeated failures to deliver projects on time, to budget, safely and sustainably – and which has put many highly skilled SMEs out of business.
This movement in our market should give us cause for optimism and the government too should stick to its guns on construction to help it deal with the tariff headwinds.
In her recent Spring Statement, the Chancellor Rachel Reeves committed a further £13bn, on top of the £100bn announced in her Autumn Budget, to support spending on infrastructure, housing, and defence over the life of this Parliament.
Construction market research firm Glenigan also estimates there is already up to £129bn worth of new projects approved and waiting to break ground. Investors looking for the potential for good returns when markets are uncertain should be looking hard at these figures.
However, this whole premise is built on the supply of quality, skilled people. Our industry will not be able to meet current and pent-up demand for its services without a suitably equipped workforce.
The Construction Industry Training Board said the UK needs more than 250,000 extra workers by 2028 and the government recently announced a £600m investment over the next four years to train up to 60,000 more skilled construction workers.The President of the Federation of Master Builders recently lamented the fact that a career in a construction related sector was still regarded as a "last resort" by many young people and their parents.
Chris Carr said that tradespeople were held in higher regard in many countries, but "in the UK it's still seen as not a great place to be...if you look at the schools, they see it as a career of last resort."
Hurdles
However, there is a major shortage of specific, targeted training in specialist building skills due to historic low demand. So, at BESA, we have launched our Skills Legacy programme to tackle one of the biggest hurdles faced by the further education (FE) sector – the lack of trainers and assessors.
We are aiming to recruit 100 experienced engineers motivated to give something back to their industry by qualifying as trainers, assessors and building safety auditors. The Manly Trust is fully funding the first 50 to give the scheme a welcome early boost.
We are also mindful that we need to tackle our woeful record on diversity. For example, people from Black, Asian, and Minority Ethnic (BAME) backgrounds represent less than 7% of the workforce in the UK's construction-related professions, according to the Chartered Institute of Building (CIOB). They also represent less than 1% in management positions and, when you consider that the overall proportion of ethnic minorities in the UK’s overall population is now above 18%, this disparity looks even starker.
We cannot deliver our full potential if we are fishing in too small a pool. Not only do we need the broadest range of skills, but we must also properly reflect the societies we serve and capture the fullest range of ideas and creativity to ensure our built environment is fit for purpose.
This is an urgent task for our sector to address and I will be debating the way forward with the founder of the Black Professionals in Construction (BPIC) network Amos Simbo OBE during the next episode of BESA’s ‘Behind the Built Environment’ podcast due to be released on Thursday 24 April.
Our people are our strength – increasingly so as the nature of our work changes. Developments like AI and smart building services technology will continue to require ‘human’ input to achieve their full potential in buildings.
While Trump’s model is based on a long-outdated principle of protectionism and closed borders, the future of building engineering services is rooted in our greatest value asset – the people who add the necessary value to economically and socially important projects.
And, just as with our open free trade economy, we need to work with the best people wherever they may be and whatever their background.