Firm on the pathway to employment, says Anthony Harrington

Construction is such a cyclical sector that for any company to be able to point to 18 years of continuous profit is a real feat. Alan Callaghan, managing director of Cruden Homes West and Cruden Building West, says that the reason the Cruden Group has been able to demonstrate such enviable continuity of growth is that it has always focused on growing organically.

"In the building sector, in particular, you have long lead times waiting for projects to get through the consent stage. So if you work on your pipeline of projects, you can see a relatively stable position for a couple of years ahead at least. Last year we turned over about £76 million in my part of the group’s business. This year it will be about £80m and next year is looking like being much the same," he says.

There is a real problem, right across the industry, with persistent skills shortages. Callaghan notes that the industry as a whole is facing a real demographic time bomb, which could be pretty devastating if it is not addressed in a timely fashion. Far too high a percentage of the current work force across the construction and house building sectors are in their 50s and 60s, which does not augur well for the future.

"We are not particularly affected at the moment by any skills shortages and I think we will be all right in this company in the short to medium term time frame. We have a very strong modern apprenticeship programme, with about 50 young apprentices at various stages, in the company, and around 14 new candidates being taken on each year," he says.

In addition, most of the firm’s middle management – many of whom came up through the trades – are all aged in their late forties or lower, so the demographic impact is going to be felt much less here. We have time to plan ahead to secure a future workforce that is both talented and highly motivated," he comments.

His operation is fortunate in having a track record of retaining about 80 per cent of each year’s qualifying intake. Cal-laghan argues that this high retention rate all comes down to both the reward structure that the company offers and to the fact that it has a very clear policy of trying to develop people’s careers.

"We call this, the Pathway to Employment, and it emphasises that you can start with us as an apprentice and end up as managing director. We have a very strong policy of promoting from within wherever possible and we are constantly looking to help our staff move forward on their chosen career path," he comments.

Nevertheless, competition for skilled staff is fierce throughout the sector and is only likely to get fiercer. Companies such as Cruden Homes West and Cruden Building (both part of the £150 million turnover Cruden Group), who are fortunate enough to be able to see a solid enough future pipeline of work to feel comfortable taking on a large number of apprentices, are constantly at risk of having their staff poached by competitors who either cannot or who choose not to invest in apprentices.

"When UK ministers talk about the apprentice levy, they tend to forget that although English apprenticeships are just two years in length, here in Scotland a trades apprenticeship is a four year affair. That is a very long time horizon for many companies to commit to the expense involved in putting a young person through an apprenticeship," he says.

On Brexit, Callaghan says that it is already having a negative impact in that the cost of a number of critical building materials have already gone up by between 10 per cent and 20 per cent.

"The problem is now difficult to avoid if the exchange rates go against us, since in effect the sector now has a pan-European supply chain," he comments. "Windows come from Scandinavia, much of the timber comes from Central Europe and so on. The more that sterling weakens, the harder it gets."

However, on the plus side, there are still plenty of jobs coming through.

"The Scottish Government has made some very bold pledges about the number of houses it would like to see built across Scotland and there is a real determination at Government level to deliver on this," he notes.

This came through very strongly at a recent site conference for Homes for Scotland, at which Cruden Homes West won Home Builder of the Year.

"We were there with the Housing Minister and the commitment from Government was clear. However, there has to be some question marks over whether the industry in Scotland will actually be in a position to deliver on all this.

"In the past 18 months or so a lot of the projects that were coming forward had their start dates pushed back by months or years. There are certainly aggressive targets to be met; it remains to be seen if this is the way it turns out in reality," he notes.

One thing that is certain, Callaghan says, is that the quality of the houses being built today is vastly superior to
the quality of homes even a decade ago.

"We are seeing at least a 60 per cent decrease in the carbon emissions of new homes today, by comparison with the homes of a decade ago, never mind homes build 20 or 30 years ago," he reports.

One way in which the industry could help itself to work around the present skills shortage – and potentially the even deeper skills shortage to come – is to do much less actual building on site. Callaghan points out that Cruden Homes already makes use of extensive factory built "parts", such as whole walls and whole floors.

Approached in this way, building requires much less labour on site and is more of an assembly job. It also helps to achieve a much more consistent and higher quality product, since the parts are fabricated in advance in factory conditions and are not subject to the hazards of whatever the weather throws at the site.

"Panelised construction is really the way to go. If we have 52 bathrooms to deliver to a student residence, it is much easier to take a pod approach in which each bathroom arrives fully kitted out and just needs to be placed in position," he notes. Over time we will see a lot more of this kind of construction in our cities and suburbs.