Rebuilding Construction (Routledge Revivals)

Economic Change in the British Construction Industry

Michael Ball

• Publisher: Routledge
• Year: 2014
• Print ISBN: 9780415739245
• eBook ISBN: 9781317811459
• Topic: Business
• Subtopic: Business General
• Index: Business

First published in 1988, this book analyses the changes that took place in the economic organisation of the British construction industry throughout the 1970s and early 1980s, in particular considering its social and economic structure and examining the causes of its poor industrial record. Michael Ball describes how the major firms survived the economic slump between 1973 and 1982 - when construction workloads collapsed - by substantially restructuring their operations, relationships with clients, workforces and subcontractors. Detailed attention is paid to construction firms, the workers they employ, the influence of trade unionism and the role of other agencies in the building process. Reissued at a particularly challenging time for the British construction industry, this relevant and practical title will be of value to students and academics of economics and social change, as well as those on courses for construction professionals.

Chapter 1
Construction: the image and the reality

Of all industries in Britain, construction has one of the worst public images. High cost, poor quality and chaotic working practices are believed by many to be synonymous with building work. Folk tales abound about what goes on in the industry. The derogatory word 'cowboy' is often used against get-rich-quick construction firms and workers. It sums up well the general view of construction — not quite proper, full of sharp practices, dangerous, inefficient and definitely not like any other modern industry.

Like all folk-lore generalisations, such views of the construction industry are based primarily on myth, but they do have close links with many people's experiences of the industry, either as consumers or as building workers.

Over the past fifteen years, the industry has contracted heavily in the face of declining orders for new work. Substantial restructuring has taken place, leading to considerable reductions in capacity. In the context of such reduced potential, it is virtually impossible to expect any rapid increase in the output of the construction industry, even if a government decided to pump millions of pounds into building work. It is also unclear what shape the new slimmed-down construction industry is in. Has it improved its hopeless record of high cost and low productivity? Are shoddy work and building failures aberrations from its past or an ever-present threat? In the midst of the rapid changes taking place, it is difficult to piece together adequate answers to such questions without an understanding of how such problems first arose.

This book explains why the building industry is like it is, and why and how it has changed over the recent decades. The popular view of construction is shown to be misplaced, but a dynamic, vibrant industry cannot, unfortunately, be revealed to replace the mythology.

The core chapters look at the organisation of the industry; the relationships between employers and workers; the role of architects and other professionals; the slump in construction workloads over the past decade; the shift away from new building to repair and renovation; how firms have managed to survive the slump and the resultant impact on the industry as a whole; and the consequences of the changes that have taken place in the industry over the past fifteen years.

When looking at the construction industry, some guiding theories are required to interpret, organise and evaluate the mass of available information. So a sub-theme running through the book concerns theories of the construction industry. Competing views are examined, and it is suggested that the industry can only be adequately understood in terms of the complexity of its social relations, its history and the overwhelming dominance of large-scale capitalist enterprises. Such an argument contrasts, in particular, with interpretations of construction which externalise its problems. Governments, economic fluctuations, trade unions, planners, even nature itself have been blamed for construction's ills, while remarkably little analysis exists of the peculiarities of capitalism in construction itself.

Before proceeding further, an introduction to the industry and its contemporary problems is required. The rest of this chapter is devoted to this task.

Construction: an overview

Employment

Around a million and a half people were estimated to work in construction in the mid-1980s.¹ The trades unions reckoned in 1984 that another half million construction workers were unemployed, and the situation did not change much in the following two years. Since 1982 the government has stopped collecting unemployment returns by industry. However, as the official statistics estimated that approximately two million worked in the industry in 1973, the trades unions' guess should be about right, though Conservative ministers throughout the mid-1980s vociferously denied the claim, suggesting instead that many of the unemployed were moonlighting (see also Building, 19 December 1986).

Manual workers in construction are employed in three ways. An unknown number are self-employed, others are employed by private contractors, while a large number (17 per cent in 1985) are employed by public authorities, particularly undertaking repair and maintenance tasks in local-authority direct-labour departments. Not all employees are manual workers. Roughly one in three of private contractors' employees are administrative, professional, technical and clerical staff (APTCs), reflecting the sophistication of the modern building enterprise.

Few manual workers now do the traditional labouring jobs associated with construction; over the past thirty years machines have taken over many of the heavy digging and lifting tasks. Roughly 70 per cent of private-sector building workers are classified as having some sort of skill, according to Construction Industry Training Board (CITB) returns. 'Skill' is a social construct denoting status, earning capacity, industrial power and the ability to exclude others, as well as indicating a capacity to undertake certain specified tasks. Construction is riddled with skill and status divisions. They have benefited certain types of workers but have created enormous rifts between trades, as well as between those workers officially designated as having a trade and those classified as unskilled. One group clearly excluded from construction has been women. Only a handful of manual workers are women; a construction site is usually an all-male preserve (Gann, 1984).

The hard, physical nature of much construction work, often undertaken in a poor working environment, is frequently combined with images of masculine stereotypes to create impressions of what construction work is like. At best a half-truth, the idea of 'hard men' dashing around construction sites with devil-may-care attitudes in attempts to make the most out of piece rates and bonuses may be used as part explanation of poor site safety, the young age profile of the workforce, and low-quality work. From this perspective, management may be said to do its best to contain the worst excesses, and is conveniently absolved of responsibility for their causes.

It is wrong, however, to take the converse view of construction workers as being united against a common enemy — the employer — or to see beneath brusque exteriors a workforce bent on mutual support and caring and sharing. Divisions within the workforce, the types of workers entering the industry, and the means by which individual and groups of workers have tried to sustain their positions and living standards have had an enormous influence on the development of the construction industry, as later chapters show.

Construction's Role in the Economy

Construction is one of Britain's major industries - it is the creator of the built environment within which most other economic activity takes place. Buildings and other construction products have a pervasive influence on social activity in modern societies. The built environment of a society expresses its cultural values, and is a major influence on the visual beauty or squalor people experience. However they look, houses, roads, factories, offices, schools, hospitals are also part of the complex physical infrastructure of daily life. A wellprovided built environment facilitates efficient production and distribution. The costs of building products, on the other hand, affect firms' profitability, peoples' living standards and, with publiclyfinanced construction, the level of taxes and public borrowing.

The state is heavily involved in runding construction work - even after years of public expenditure cuts. In 1985, 32 per cent of all new construction work was undertaken directly for the public sector, while much private-sector work receives public subsidies or tax reliefs (such as mortgage-interest tax relief for owner-occupied housing, and investment allowances on new buildings for companies).

Involvement of the state in construction expenditure has qualitatively changed over the past fifty years, reflecting trends in capitalist economies. Certain services and transportation facilities, for instance, have to be provided publicly for economic activity to continue. The state has also intervened to varying degrees in attempts to resolve the inability of unregulated private markets to provide basic consumption goods like housing. Investment by private industry, in addition, is often encouraged by free state infrastructural provision.

Apart from the uses to which construction products are put, the industry is a major source of economic activity in itself. In 1983, 5.8 per cent of total national income was generated in the construction industry. To get an idea of relative size, such a percentage is over three times as great as agriculture, larger than all the transportation industries, and about a quarter of the contribution of the whole of manufacturing industry.

Construction is also a labour-intensive industry. In 1984, manufacturing industry had a fixed capital stock equivalent to 3.13 times its net output for the year, whereas construction had a fixed capital stock equivalent to only 0.81 of its annual net output.² Construction is also overwhelmingly a domestic industry. Overseas work, though significant for some individual firms, was only 9 per cent of the value of gross UK construction output in 1984.³ Imports, on the other hand, constitute a relatively small, though growing, proportion of construction inputs. Many construction materials are too heavy or bulky relative to their value to make extensive international trade viable. Only when there is a lack of indigenous sources (e.g., for Britain, timber) or when domestic prices rise well above foreign prices — perhaps because of monopolistic pricing or the use of outmoded plant - does the importing of materials like bricks, plasterboard and cement occur. Overall, the value of its imports constituted just over 5 per cent of the industry's output in 1974, and the proportion is unlikely to have changed much since then.⁴

Economic Regulator

Construction's position within the British economy has encouraged its use as an economic regulator by successive governments since the Second World War.

In terms of the usefulness of the existing built environment, variations in construction output have little short-term effect. Given the durability of most construction products and the sheer size of the existing built environment in relation to either new output or repair and maintenance expenditure, a rundown of construction output takes a long time to have any significant influence on users. Increases in construction output take a similar time to have much noticeable effect. How much is spent on construction can, as a result, vary quite sharply from year to year without significantly affecting the state of the built environment.

Such limited short-term physical consequences, plus the high proportion of public expenditure in total construction output, make the industry prone to the adverse effects of public expenditure cuts. It is virtually impossible for building workers to resist such cuts, making public construction expenditure a soft option for the Treasury knife. The labour-intensive nature of much construction work and its low reliance on imports produces the opposite effect when a government wants to stimulate overall demand. Expenditure on construction, within limits, becomes a good means of reflation, and one frequently endowed with moral superiority over other potential forms of reflation — 'investing in the nation's future'.

Construction's role as an economic regulator should not be exaggerated, however. Building-employers' organisations, in particular, have used fluctuations in construction demand as an excuse for many current practices in the industry, which, as will be seen later, are more adequately explained by factors internal to the industry. It is also not that easy to turn the construction tap on and off in the short run. There is usually a long gestation period between the decision to implement a construction project and the actual commencement of building work, while on major projects the job may take years to complete. Cancellation may be prohibitively expensive once contracts have been let, when extensive pre-planning and design has been done, or when the project is semi-completed. So, overall, the possibility of rapid cuts in construction expenditure may be limited, and sudden increases in construction work are even more difficult; all the planning and pre-construction stages have to be gone through for any new projects proposed. The construction industry may also not have the ability to take on much more work in the short-term. Such structural rigidities in the industry were clearly seen in the years following the two World Wars.

The rundown of the British construction industry since the early 1970s has been of major concern to many. Key features of Britain's built environment are now in bad shape. There is a growing shortage of decent houses; roads are poorly maintained; new public transportation schemes are sorely needed; inner cities, and soon the interwar suburbs, will have to be rebuilt and renovated; while Victorian sewerage and fresh-water systems are on their last legs. For virtually every use to which construction products are put a long list of much needed projects could be drawn up. Mass unemployment in the building industry has also generated considerable concern. Furthermore, consumer groups and outraged 'bona fide' building firms want to do something about the 'cowboy' enterprises that seem to have blossomed as a result of the industry's decline.

Given the importance of construction in the economy and widespread concern over unemployment and the state of the built environment, it might be expected that the health of the industry is high on the political agenda. However it is not. After a flurry of legislation restricting the activities of local-authority direct-labour departments in the early years of the first Thatcher administration, the Thatcher government has subsequently turned a deaf ear to pleas from building employers and unions, the CBI and the TUC, the Labour opposition and others to expand construction output substantially. Yet Thatch erite laissez-faire policies alone cannot explain the current political impasse over the construction industry. All the politicians and pressure groups pushing for action over construction were and are concerned only with the industry's role as provider of buildings and as an economic regulator. Apart from some complaint from building trade unions, little concern is ever voiced over the nature of the industry itself. Yet the record of the construction industry is little short of appalling in terms of the quality of its products, its waste of resources and lives, and the poor working conditions most of its workers have to face.

It would be tedious to go through all the problems of the construction industry and the debates that surround them. Just a few indicators suggest that serious difficulties exist, and that they cannot simply be put down to a contemporary lack of public-sector demand. Product quality, employment conditions and general productive efficiency are three areas which bring out the extent of the industry's failings.

A dismal catalogue

Product Quality

Consumer power can hardly be said to rule in construction. Virtually no client of the industry seems happy with its products. Construction projects frequently take too long to build, cost too much, do not meet user requirements, and fail to last as long as they should, often quickly requiring extensive remedial work. Agents in the construction process are usually adept at ensuring that blame does not stick to them. Who, for instance, is to blame when it is reported some ten years after a structure is built that it has to be extensively repaired or demolished? The causes of building failure are usually ascribed to the catch-alls of poor design and bad workmanship. Few aggrieved clients can seek redress through the courts, as the offending parties cannot be identified, have gone out of business, or the case cannot be sufficiently proved beyond doubt to be the responsibility of the offending party.

It is impossible to know the proportion of design and building work which is substandard. However, a brief look at the few surveys which exist and the general press suggests that the proportion could be high.

Industrialised bousing systems Perhaps the most famous and spectacular building failures over the past forty years are the ones associated with proprietary industrialised housing systems.

Industrialised systems can take many forms. Generally, substantial parts of the load-bearing structure are fabricated out of nontraditional materials, usually in an off-site plant. Early large-scale use of industrialised systems was associated with the application of concrete systems to houses - Wimpey's No Fines (fabricated on site) and...

Table of contents

• Cover
• Title
• Copyright
• Original Title
• Original Copyright
• Contents
• Figures
• Tables
• 1 Construction: the image and the realit
• 2 Is the construction industry backward?
• 3 The different types of building enterprise
• 4 The development of class relations in the building industry
• 5 How construction firms organise production
• 6 Construction output: a thirty-year view
• 7 A hierarchical industry
• 8 Keeping up profits
• 9 Takeovers for growth
• 10 Sectoral restructuring
• 11 A new social balance in the construction industry?
• 12 Dilemmas in construction
• Notes
• Bibliography
• Index