The double impact of a global pandemic and Brexit has rocked many industries, and construction has certainly been one of those affected. But along with the practical issues that we must all now deal with, there are also opportunities for change that could see the sector come back stronger than ever in the long term. Here we take a quick look at the current state of play, and what we can look forward to.
UKCA and CE Marking
Prior to the UK leaving the European Union (EU), manufacturers selling products covered by the New Approach Directive within the European Economic Area (EEA) were expected to meet CE Marking standards and issue an EC Declaration of Conformity (DoC). Whilst we can still measure the quality of products with a CE Mark up until 1 January 2022, the UK needed to create its own standard to assess whether products conform to all legal safety requirements following Brexit. This new standard is called the UK Conformity Assessed mark (UKCA) and all specified products sold to the UK must be reviewed by an accredited UK Market Conformity Body.
It appears that the requirements aren’t drastically different, so for companies who already meet CE Mark standards, it’s unlikely to be a big concern. However, the CA Mark is only recognised within the UK and does not demonstrate compliance as per the EU Directive. If a business supplies to the EEA and the UK, it will need to ensure that it has both a CE and CA Mark in place by 1 January 2022. For goods sold in Northern Ireland, from 1 January 2021 manufacturers are expected to follow the Northern Ireland Protocol so that their products are assessed to European standards by an approved third party for the new UKNI mark.
Following this, manufacturers will need to go through any literature to ensure it is accurate and up to date. Where it references standards, it will need to be amended for the country being supplied to (ie. BS for the UK and EN and ISO for European countries, where they aren’t universal). All existing EU certificates will need to be transferred to one of the 27 EU member states or a relevant authority as the GB ones will not be valid.
Brexit and the economy
In addition to the changes to product marking, the overall impact of Brexit on the construction industry has been a concern for some time. On 1 January 2021, both a trade deal and a UK Immigration Scheme came into effect. As this is still quite new, it will take some time to see how this will realistically affect the cost of construction, timescales, and labour shortages, but there have been some anecdotal reports of price rises for raw materials and product shortages. The Office for Budget Responsibility (OBR) published a report in March 2021 on the ‘Impact of the Brexit trade agreement on our economy forecast’. It has confirmed that there is no additional tariff on building materials following the trade deal, but it does highlight that there has been a 10-15% drop in shipments since January which has affected the supply chain. It also acknowledges that this may improve somewhat in the near future, as health checks and travel disruptions as a result of the pandemic are expected to ease later in the year.
The true economic impact of Brexit may take up to 15 years to be seen, but there are challenges that the industry is having to address now. Some manufacturers made provision to stock-pile raw materials prior to the trade deal to ensure they could meet their commitments during the transitional period. Unfortunately, the pandemic forced many businesses to rely on any safeguards and provisions they’d put in place for other purposes, whilst projects across the UK were put on hold or experienced a slowdown in work. Building Magazine reported last year that almost half of construction businesses saw a significant drop in turnover due to Covid-19.
As a result of the financial strain and uncertainty over the last year, there have been high numbers of redundancies across most industries. The Construction Leadership Council (CLC) predicts that redundancies within the construction industry may be as high as 40% in the UK. There is also a shortage of apprentices and many foreign skilled labourers are leaving the UK and aren’t expected to return due to the new administrative process. As a result, it is likely to mean longer delays whilst employers apply to be sponsors for global workers who meet the criteria for jobs that UK workers may not be adequately trained for. This will undoubtedly increase both the financial burden and negatively impact job completion times. In addition, whilst the Office for National Statistics (ONS) has reported that the construction industry has seen a growth in output in some sectors, there are concerns about product demand and shortages in raw materials globally. This is expected to affect project timescales for the rest of 2021.
The way forward
However, the story is not all one of doom and gloom. Construction as a sector has been highlighted by the government as key for driving growth and recovery, and has continued to operate, even through the recent lockdowns. Meanwhile, the rapid advancement and adoption of digital technologies has helped to move the industry forward in this critical area and forms a crucial part of the CLC’s roadmap to recovery – a strategic plan to be delivered over the next 2 years that will support the sector in helping to drive the economy back on track.