New company count figures point to ‘fragmenting’ Scottish construction sector
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The Scottish Building Federation (SBF) has expressed concern about new evidence pointing to a fragmentation in the Scottish construction industry as a result of the economic downturn.
New official figures show a slight increase in the number of companies operating in the Scottish construction industry during 2014. Trade association SBF has released analysis of the latest figures from the Office for National Statistics which shows that the number of medium-sized and larger construction businesses remains significantly below levels recorded in 2009. At the same time, the number of small businesses operating in the sector (those employing fewer than 10 people) rose by 280 to 15,620 this year.
A total of 17,180 VAT and/or PAYE based Scottish enterprises operating in 2014 are classified as operating in the construction of buildings, civil engineering and specialist construction activities, an increase of 235 over 2013 although still 1,236 or 7 per cent lower than in 2009.
However, SBF analysis shows that the number of medium-sized companies operating in the sector is 25 per cent lower than in 2009 and actually 43 per cent below a previous peak recorded in 2010. Medium-sized companies are classified as those employing between 50 and 249 people. The number of larger Scottish construction companies (those employing more than 250 people) has also dropped from 35 in 2009 to 25 in 2014.
There has also been a particularly significant drop in the number of companies recorded as working in the construction of buildings, down 1,235 or 23 per cent in 2014 compared to 2009.
Scottish Building Federation managing director, Vaughan Hart, said: “It’s encouraging that the overall number of companies operating in the Scottish construction sector has risen this year following significant declines in previous years. At the same time, we’re seeing a proliferation of smaller companies operating within the industry. Conversely, there are significantly fewer medium-sized and large employers operating in the sector than was the case five years ago.
“These figures also point to a particularly steep decline in the number of companies working in the construction of buildings compared to those operating in civil engineering or specialist construction. That cannot be a healthy situation for the long term skills base of the industry.
“In terms of rebuilding that skills base, it’s the medium-sized segment of the industry that now needs support. These are the companies that will provide employment opportunities for apprentices in significant numbers in the years ahead. We need to work hard to rebalance the size profile of Scottish construction businesses. To secure a stable long-term future for the industry, achieving a suitable balance of companies of all sizes within the industry is critical.”
Analysis: Number of enterprises in the Scottish construction industry 2009-2014
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