Supply chain is under-resourced and fragmented, say experts

Jack Wooler reports

A Round Table discussion was held recently at London’s Sky Garden, asking a range of experts from across the sector the question, “Is the supply chain fit for purpose?”

The panel at the event, hosted by Jablite, discussed the key aspects of the supply chain that need attention, as well as how it can help deliver the Government’s ambitious new homes targets, and how innovation may suffer in this rush to build.

Greg Hill, deputy MD of housebuilder Hill, saw “two fundamental challenges” as most pressing to the industry. The first, widely agreed across the panel, was “a lack of resource,” and second, the “extremely fragmented” nature of the supply chain.

The problem of capacity dominated the conversation, with the rising skills crisis being echoed by several panel members as a critical issue. Fear of uncertainty caused by Brexit was also prevalent, with the possible loss of EU workers exacerbating the already dire skills climate.

The “impact of tariffs” following Brexit was a concern raised by Peter Andrew, deputy chair of HBF. He referred to materials such as timber, which can’t be grown in England to the same extent it’s imported, and said that possible trade tariffs with the EU are bound to “cause issues.” There was agreement that adding any more uncertainty to the process would inevitably slow the sector down.

It was generally accepted that schools do not promote the industry enough. Even though there are a huge range of well-paid positions in the sector, it’s not glamourised in the same way in which a lawyer is, for example. David Jervis of Spitfire Homes agreed, adding that “we’ve got to attract the youngsters,” referring to the industry’s crisis of image.

Prejudices involving construction were also accepted as a part of this, with a lack of diversity in both gender and ethnicity. To prove this point Geoff Pearce, executive director of Swan Housing Association pointed to the room, which included relatively few women and a vast majority of “white men in suits.” With the growing crisis in skills and the shortage of housing, he said “it’s clearly unsustainable to ignore 50 per cent of the population.”

Bringing the conversation back to the supply chain, chair Rupert Bates (of Showhouse magazine) asked the panel, “Do you think by using the term supply chain we’re implying a subservience to housebuilders?” Rebecca Larkin, senior economist at the Construction Products Association commented, “We’re a cyclical industry, so it works both ways.” It was made clear that more could be done to improve the relationship and efficiencies between housebuilders and the supply chain. “We could certainly work a lot closer together,” added Peter Andrew.

Innovative companies were involving the supply chain much earlier on in the housebuilding process, panel members agreed, and it was also suggested that the supply chain should be more widely involved in the planning process.

Imperative to all this however, it was argued, is a stable economic background from which to work. The panel agreed that a huge amount of reassurance is needed in the industry, with major investments made three to five years in advance of actual builds. Rebecca Larkin referred to the industry’s need for “greater flexibility to deal with economic challenges,” with all members of the board recognising the toll the 2008 crash took on the industry.

A member of the audience later spoke up, claiming that buildings in Britain are boring, and that we could do much more offsite. The range of UK housebuilding is something akin to “50 shades of beige,” he quipped. Andrew Burgess, group land and planning director at Churchill Retirement Living heartily disagreed with this, saying housebuilders “build for the customer and to context,” he replied, providing whatever the buyers ask for, and ensuring that their developments don’t look out of place in their surroundings.

Offsite construction however was, overall, accepted as the most promising innovation in construction, but was not agreed as the sole solution to fix the industry. Geoff Pearce of Swan Housing, who are investing in their own modular housing factory, said that “necessity is the mother of invention.” He believed that all big housebuilders, “whether they’ve realised it or not,” are looking at offsite construction schemes and its future within the industry.

Offsite is still an emerging force, and some housebuilders are unwilling to risk investing in such small companies. It was argued that the off site sector needs to be grown sustainably, and should perhaps be adopted first by SMEs and those who can build their own facilities.

Large scale developments are often sold in waves, allowing time for excitement to be built and sales to be made while constructing each phase. This of course prevents empty homes stagnating. The ‘instant’ nature of off site builds however would work against many housebuilders’ sales strategies, but would perhaps benefit HAs, who would have more to gain from speedy builds and move-ins.

Financing of SMEs was another key topic covered by the panel. Peter Andrew of HBF noted: “there is a lot of money around, but it’s just not finding its way to SMEs.” The question was aired of small builders’ equities could be stretched to more than a few projects? There was litter clarity on how to achieve this, but Andrew was certain that “we need more players on the pitch.”

While many suggestions were aired at the event, two messages were clear. Firstly, there’s no catch-all answer to fixing the housing crisis, and also, the relationship between supply chain and builders needs to improve.