Construction in Scotland

Countries covered: Scotland AMA Research have published the first edition of a review of the Construction Industry in Scotland, focusing on the structure of the industry, change in the industry and the key drivers behind that change. Key areas in the report: An overall review of construction output in Scotland. Analysis of output in Scotland by individual end-use sector. Review of investment programmes for each sector. Detailed analysis of the Scottish Infrastructure Investment plan. The report contains 58 pages and 26 tables & charts of detail and observations on the Scottish construction market, an invaluable aid to those companies operating or interested in the country. Areas of particular interest: Review of the alternative funding mechanisms in Scotland. Analysis of the forecast capital expenditure programmes to support education, health, transport, energy, housing, enterprise & tourism and climate change & water. Breakdown of capital expenditure in Scottish Local Government. Forecasts of the construction output through to 2013 for each of the key sectors in the Scottish economy. Contractors included: A & J Stephen (Holdings) Ltd, Arup, AWG Property, Balfour Beatty, Bam Construction, Barratt Developments plc, Bellway plc, Bovis Lend Lease, CALA Group Ltd, Crest Nicholson plc, Davis Langdon, Galliford Try, Gladedale Holdings Ltd, Interserve Project Services, Kier Group plc, Laing O’Rourke, Mace, McTaggart & Mickel, Morrison Construction, Persimmon plc, Redrow Group Ltd, Robertson Dawn Health, Scotia Homes, Sir Robert McAlpine, Stewart Milne, Strathclyde Homes, Taylor Wimpey plc, The Miller Group Ltd, Tullock Homes. Key areas of coverage in the report include:- CONSTRUCTION MARKET IN SCOTLAND Overall construction output - recent history and forecasts through to 2013. New construction output in Scotland - recent history and forecasts through to 2013. Repair, Maintenance and Improvement output in Scotland - recent history and forecasts through to 2013. Mix by key sector. Comparison with 2002. Construction employment levels, reasons for change. FACTORS AFFECTING CONSTRUCTION IN SCOTLAND Scottish Infrastructure Investment plan - main funding mechanisms, role of local authorities. Investment by sector - First Minister, Education, Universities, Transport, Enterprise, Energy& Tourism, Health, Climate Change & Water, Sports, Housing. Funding issues, key projects, expected levels of investment etc. CONSTRUCTION OUTPUT BY SECTOR Value of new housing in Scotland, split by public and private sector, with forecasts through to 2013 and completion data to 2008.  Also, RMI data in the residential sector. Analysis of the Infrastructure sector and forecasts through to 2013. Analysis of the private new commercial sector and forecasts through to 2013. Analysis of the private new industrial sector and forecasts through to 2013. Assessment of public sector new work with history back to 2003 and forecasts through to 2013. Analysis of RMI in the non-residential sector. Future Outlook - key factors influencing the short term 2009-2010, key factors influencing the medium term future covering 2010-2013. Overall structural mix changes in the Scottish construction industry. CONTRACTOR PROFILES Key construction companies and contractors. Key housebuilding companies and contractors.

Additional Information

The construction industry is vitally important to the Scottish economy. It employs over 220,000 people, with around 90% of these being skilled professionals and contributes more than £12 billion to the Scottish economy each year, representing about 10% of Scotland’s GDP. For comparison purposes this is twice the contribution of the agricultural sector and almost three times that of the combined utility services.

In employment terms 45% of all construction apprentices are trained in Scotland, with over 4,000 new apprentices each year, if the electrical and plumbing trades are included. The construction industry is estimated to require 6,320 new recruits each year until 2012 to meet projected demand.

The Scottish construction market was valued at an estimated £10,751m in 2008, an increase of 2% on the level reached in 2007. Trends in market size and forecast growth rates are illustrated in the chart above.

The output of the Scottish construction industry expanded steadily from £7,676m in 2003 to £10,751m in 2008, although the rate of growth was moderating throughout the period. Annual growth rates in the 2003-2006 period averaged nearly 12%, but growth slowed significantly to 2% in both 2007 and 2008.

New work has always formed the major part of construction output and had grown from 61% of the sector in 2002 to around 66% in 2007. However, this proportion declined to 64% in 2008 and is likely to decline further in the next few years, as the recession impacts more significantly on new construction projects.

Housing activity accounted for 41% of the total construction industry output in 2008, compared to 40% in 2002 though this figure is expected to increase to 42% by 2013.

Housing RMI, new Private Commercial work and Private New Housing together account for 54% of all construction work in Scotland at the present time, with 19%, 18% and 17% of activity respectively.

Private new commercial output currently accounts for around 18% of total construction output in Scotland and is the second largest sector in the industry. Output has grown steadily since 2003 to reach £2,129m by 2007, but declined in 2008.

Projections formulated in 2008 suggested that strong infrastructure output growth of 4.1% annually between 2008 and 2012 was likely to be a driving force behind construction growth for Scotland. This included the Scottish Government’s £3 billion Transport Investment Programme and large scale regeneration projects, including the development of a new town at Ravenscraig. The Scottish Government has also set a target of 35,000 new homes annually by 2015.

The economic circumstances facing Scotland and the UK, are very hard to gauge at the present time. Nevertheless, it is estimated that total construction work will decline by 8% in the current year, will remain virtually static in value terms in 2010, before increasing by 5-6% in the following years, to reach a value of £11,635m by 2013.