CAN WE BRIDGE THE ENGINEERING SKILLS GAP?

The engineering sector is currently experiencing a lack of talented, trainee, qualified and experienced Engineers coming through. This skills gap is not just an issue for the engineering sector but for many other UK industries too.

What is a skills shortage exactly?

A skills shortage is when there are not enough people with a particular skill to fill vacant roles and meet demand. Any industry can be effected by a skills shortage at any time and these shortages can happen for a number of different reasons.

How has this current skills shortage affected the engineering sector?

Within the engineering sector in the UK there are 5.5 million people employed across a vast selection of roles in the industry. The engineering sector generates an impressive revenue of £455.6B to the UK economy, 27.1% of the total UK GDP! According to stats published in the latest Engineering UK 2016 report employers are looking for a minimum Level 3 qualification when considering filling engineering roles, with there now being a requirement for a rise in skill level to a Level 4 and above qualification. There is currently an annual shortfall of 29,000 people with Level 3 skills and 40,000 with Level 4+ skills! It is stated that 182,000 people with engineering skills are needed per year up until 2022 in order to bridge this gap. The demand for skilled Engineers is high, the salary companies are offering these workers represents this, and the demand has forced salaries to rise.

Why / how has this skills shortage come about?

There is still a strong misconception about what it means to be an Engineer and to work in the sector, the image is very dated and inaccurate. Due to a negative representation of the industry held by many, it is preventing talented individuals choosing engineering as a career. It is widely documented that the engineering industry is dominated by men, this should not act as a deterrent to any females considering engineering as career. This post about women in engineering can help disperse any stigma in regards to this.  A lack of understanding as to what it means to be an Engineer and what it is like working within the engineering sector has seen a fall in the amount of individuals pursuing a career in the field.

How can the skills shortage be resolved?

There are a number of ways this skills shortage can be resolved, the most effective way may be focusing on education.  If the image of being an Engineer and having a career in the engineering industry can be positively reinforced more and more children and young adults will be open to the idea of pursuing it as a career. An Apprenticeship or Higher Education qualification is a perfect way to start on your career path within this industry, this needs to be encouraged! A career in the industry opens the door for a number of amazing career possibilities and offers a varied and fulfilled work life. The Engineering UK 2017 Synopsis and recommendations provides more of an insight into the industry.

In an article published on Modern Building Services Online discussing the Apprenticeship Levy as well as the engineering skills gap BSRIA, chief executive Julia Evans said the following ‘What is paramount is how important it is to close the industry skills gap. Apprenticeships provide the backbone for a career in engineering for many employees, and no compromises should be made regarding them. In essence, the levy must meet industry and apprenticeship needs.’

This statement reinforces the fact that it is vital this engineering skills shortage we are experiencing is rectified, and Apprenticeships will play a huge role in achieving this.

Has this engineering skills shortage affected you? If so, how? I am keen to find out and to see how I may be able to help in anyway. For your engineering Recruitment needs, if you are a client needing to find skilled workers to fill your roles, or perhaps a skilled worker looking for a new role contact Calco and we can help! Contact Gemma Humphrey on 020 8655 1600 / g.humphrey@calco.co.uk

Residential Market Post Brexit

 

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It is now over four months since the Brexit vote and there are no real indicators as to what the short-term future holds for residential developers and the extent of regional variations.

There were various changes in the market before Brexit including an increase in stamp duty and the changes in the tax regime with regards to the interest cost of rental properties which would justifiably have reduced demand and lead to a reduction in the increase of property prices.

The uncertainty that the country now faces in the delivery of the Brexit result could impact property prices with London particularly susceptible to any perceived or real change in status as a leading world city and financial services centre.

In recent months since Brexit the values of prime high-value stock has declined by up to 8% in Central London – mid value stock has flat lined showing no increase while lower value stock has shown modest growth.

This has not had much affect yet as most properties being delivered since Brexit were pre-sold, however, reports from all the major house builder are bullish about current sales and forecasts for the next twelve months.

The consensus appears to be that the residential market was due a correction before Brexit and that any correction will not be attributable to Brexit alone. The already mentioned adverse tax and stamp duty changes together with constantly increasing prices over the previous five years had to end at some point. Some commentators have likened the current climate to the 2002-2004 era where we saw a relatively soft landing with property prices reducing by a maximum of 10%.

As in any market there are opportunities with the weakness of Sterling making investment in residential properties within the UK an attractive proposition for overseas investors. The continuing low interest rates present an opportunity for domestic buyers to trade up or become first time property owners.

The domestic market is subject to the ongoing availability of reasonably priced mortgages and the ability of first time house buyers to accumulate a deposit to continue to show stability and maybe some modest growth.

In conclusion, there is still strong domestic demand however this may be affected by affordability issues, UK property is still attractive to foreign investors as long as London retains its world and financial status and in an ideal world schemes to assist first time buyers are increased.

In essence, Brexit has increased uncertainty in the residential market which has increased the risk but also the opportunities.

What does BREXIT mean for the Construction Sector?

After the surprising referendum result on the 23^rd June in the referendum all we have seen in the subsequent six weeks is more uncertainty and the realisation that there were very few contingency plans in place in most sectors including construction.

On reflection, it is probably fair to say that both sides exaggerated the implications of a remain or leave result and that the initial falls in equities have been largely reversed. So now we are in a period of uncertainty as to what the future will look like which increases the risk especially in Capital Expenditure so it is reasonable to expect a reduction in construction activity.

In fact the Markit/CIPS UK ConstructionIndex has fallen for two consecutive months in June and July reflecting the biggest decline in construction activity since 2009 most markedly in the commercial building sector. However, the market would appear to be more resilient than expected and as with the rest of the economy the sector has adopted a “wait & see” approach to investment.

The Construction Sector was largely in favour of remain, in fact one survey had the industry voting 85% to remain. Concerns were that some 60% of building materials were imported and a fall in the value of the pound would increase input costs. The reliance on overseas labour to undertake construction activities, the investment of the European Investment Bank of £7.8bn in 2015 alone and the uncertainty of the future location of the banking, investment and insurance industries and their associated advisors were also issues of concern. As mentioned before this uncertainty increases risk and therefore investment decision in all sectors of construction.

This uncertainty is not going to be resolved for some time until the exact details of the UK exit from the European Union are known. Moreover, the risks can be managed by having contingency plans in place (under development currently) and taking advantage of current opportunities in the market.

For instance, the cost of borrowing at present is at an all-time low and it is the ideal time for the British Government to borrow to fund much needed infrastructure projects to increase the overall competitiveness of the British economy.

The housing sector is still under building every year and will remain strong despite BREXIT and the government could consider borrowing to invest in the social housing sector to boost activity in an area where there is still huge demand.

While commercial development has been strong with low vacancy rates (circa 4%) and a significant slowdown in forward orders, this could be cyclical as 30% of new stock currently in development will come online in the next twelve months. Conversely a weak pound can be used to promote Britain to foreign investors and with the current levels of liquidity available, projects can be funded and commenced on short timescales.

In conclusion the market will not grow as fast as in recent years, however Experian is still predicting growth in the construction sector of 2% (down from 4%) in 2016 and some challenges to overcome. But this has always been the reality, remember when the UK did not join the single currency, the doom sayers were predicting economic armageddon and we survived and grew stronger.

The Construction Sector has proved resourceful and resilient in the face of previous challenges and it can look forward to the future with confidence whatever may come.

The changing face of Croydon

“Croydon is on a journey of transformation and for the first time in perhaps a generation has started to get more good publicity than negative publicity” Councillor Newman, CroydonCouncil.

Croydon’s skyline is dramatically changing and for a town that was seen as a mini Manhattan in the late 1950’s and early 1960’s when a majority of existing high-rise buildings were built, the new developments are looking to change the dynamic in Croydon Town Centre.

It is probably fair to say that Croydon Town Centre clears out at 5:30pm every evening. However, Westfield’s experience in London and Stratford is that if you create the environment, the people who shop there in the daytime and the residents commuting back in the evening will stay and you can create a vibrant location that people will enjoy until midnight.

This thinking is at the heart of the Croydon Partnership, a joint development between Westfield and Hammersons who plan to spend £1.4bn on the refurbishment and upgrade to the existing Whitgift Centre in the heart of Croydon. The Whitgift Centre – originally opened in 1968 – was the largest covered shopping centre in Greater London until the opening of Westfield London in 2008. Its refurbishment including what is required today with entertainment, cafes, bars and restaurants in addition to retail will put the heart back into Central Croydon and stop it’s clearing out at 5.30pm daily.

There is also the major re-development around East Croydon station including Ruskin Square to the west of the station and the large Redrow Homes development, Menta to the east. Ruskin Square will comprise some 5 Grade A Office Buildings with 1.25m, 625 new homes and 100,000 sq ft of retail, cafés, bars and restaurants.

There are many other residential developments such as Saffron Square and The Island and the refurbishment of former commercial office buildings being converted into apartments such as Delta Point and St Anne House. This increase of people residing close to the Whitgift Centre and Ruskin Square will show a substantial increase in demand for leisure and entertainment facilities.

The potential for Croydon is enormous as its current population of over 350,000 is forecasted to grow to over 400,000 in the next five years and according to Robin Dobson from Hammersons. Croydon has a catchment population of 3.3m and a potential spend of £17bn and with the West End becoming increasingly unaffordable, Croydon is uniquely located to become a new retail leisure hub destination for South London.

Croydon is also developing as a digital hub and is being promoted as an ideal location for start-ups and established tech businesses. With an abundance of commercial space  available at rent of less than half of those in Central London and 25% of its population under 16 – it has the ideally structure to succeed.

All these changes are being promoted and overseen by Croydon Council and its Planning Department has a definite strategy of where it is going by placing people and their needs at the heart of the Development Plan.

Croydon is a very good place to be in at the moment. If you are passionate about construction and would like to be part in any of these exciting projects, you can always contact recruitment agencies like Calco Services that can help you be part of Croydon life.