The construction industry lacks a trained labour force of sufficient size to execute the required strategies

House prices have been rising and are showing no signs of coming under control, at least in terms of the price inflation rate emulating the general rate of inflation.

We hear about demand-pull inflation all the time. It’s easy to understand: you have a relatively fixed supply (in this case housing) and as demand for it increases, prices go up.

The lesser-known evil twin is that of ‘cost-push’ inflation. This is where prices rise because of higher production costs. Imagine that being a problem at the same time as we have a shortage of housing.

Sometimes, I think our housing market is in perpetual crisis, mimicking the first law of thermodynamics. But where “housing crises cannot be created or destroyed”, each crisis just moves between one part of the cycle and another.

The thing that escapes most people (but not builders, quantity surveyors or others in trades) is that, apart from house prices being volatile, the raw materials are too. This means that breaking ground in 2017 will cost more than an identical project would have 12 or 18 months ago.

The bigger the job, the bigger the price variance can be, because the elements that affect the price don’t rise in an even way.

First, consider the cost of materials. Call any builder’s provider and ask them for yourself. I confirmed it with one of my preferred sources for materials, Newtown Supplies, a builder’s provider in Coolock in Dublin, which I have dealt with for years.

The most common construction materials are brick, concrete, timber, blocks and steel.

Steel prices have increased since the end of 2015, including everything from plate steel to rebar. These are vital elements of concrete fixing, which helps to make everything from foundations to building cores and the frames of large commercial units.

Block prices went up a few years ago, but remain fairly constant at about 70 cent. The same cannot be said for bricks.

Rough-faced bricks now cost about €1, up by 20 cent in the past two years. Prices here changed in part due to an almost year-long industrial dispute at Kingscourt Manor Bricks, where the price after a supply pinch has been slow to come back down.

Timber prices have gone up several times. A length of rough 4-by-2 will cost you more than €8, including Vat. A few years ago, it was in the mid-€7 range. Plasterboard has also been on the rise: it seems to go up twice a year of late. Plain board, which is about €10 a sheet, cost about €9 a year ago.

This is not an exhaustive list. Now imagine the overall increased cost of these components for an entire housing estate, an apartment block, or a children’s hospital?

That’s before we look at the effect of the building control amendment regulations (BCar) which were, and will continue to be, a source of delay and higher cost with possibly, but not guaranteed, better outcomes.

Lastly, and this is the real fly in the ointment, we have the issue of labour costs. This column discussed labour bottlenecks last autumn.

Since then, it has become more apparent that we do not have enough tradespeople employed in the construction sector.

Ask anybody in construction how easy it is to find a carpenter at short notice, or why, when they quote a job, it is becoming harder to price because tradesmen are too busy to take on the work.

Those who got out of the trades during the crash will probably be slow to re-enter for a number of reasons, including negative past experiences, de-skilling which has occurred in the interim, and in some cases the up-skilling needed to get back on the job. Or it could be as simple as not having enough money to renew a cherrypicker licence or a Safe Pass. Or perhaps they got into something else and simply don’t want to go back to construction.

This all points towards an uncomfortable reality: we need to get our kids trained up in construction. But what parent is going to encourage their child to become a brickie if they have the potential to get a Bachelor of Commerce (the leading undergraduate business course in Ireland) instead?

Rather, we will increasingly rely upon foreign labour, which we suppress and delay in terms of legalising immigrants’ status here.

Here’s the kicker: just as we get a competent housing minister, just as we finally come up with some credible plans and the available funding to realise those plans . . . success proves elusive and we realise that we lack the labour force required to execute it all.

Karl Deeter is compliance manager at Follow him on Twitter, @karldeeter
This article originally appeared in the Sunday Business Post on the 19th of March 2017

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