The last few years there is a phrase that has become more and more familiar in our global world. ‘Supply chains’.
Never before have a I heard the words ‘supply chains’ being mentioned so many times by businesses and the press.
Just yesterday I was listening to radio 4 and there was an entire programme just on the issues of ‘global supply-chains’.
The word ‘global’ could be regarded as the main problem.
A global world has become a much smaller world where products are made and distributed around all over the planet at incredible speed.
Countries with high labour costs have imported more and more products from countries with low labour costs, which has resulted in cheaper good across the globe.
A global world means more competition, which drives down prices so we can buy cheap stuff from virtually anywhere we want.
What price are we willing to put on the environment as we face a climate emergency?
George Clarke Architect, writer, TV presenter and Ecodan Ambassador
High Carbon footprint
Unfortunately, many of these products from overseas have had a high carbon footprint because they have often travelled thousands of miles before being put to use in the UK.
What price are we willing to put on the environment as we face a climate emergency?
There is no doubt that businesses and consumers benefit from much greater choices in a global world. It’s unbelievable the choices we now have compared to 30 years ago.
If you go to a big supermarket and wander down every aisle it is staggering the number of products on sale from all over the world.
Even tiny supermarkets shock, amaze (and devastate) me when I see fresh fruit from Portugal, Morrocco and Chile, that has travelled many miles in just a few days after being harvested, so we can benefit from having whatever we want anytime of the year.
Low cost products with a high carbon footprint that are damaging to the planet, surely isn’t the way the world should be doing business at the beginning of what is meant to be the dawn of a new ecological age.
Reduced production
We have seen the impact that Covid has had on the construction industry. Factories have closed for months or continued with much reduced staff levels, massively reducing the production of construction materials and having a terrible effect on the building process.
Brexit has meant we’ve had more and more red tape across the European Union and a shortage of lorry drivers to deliver building materials from factory to site.
Brexit has also seen a huge reduction in skilled workers across the construction industry. Fewer skills means slower progress on site as well as higher labour costs; a double blow to the financial management of any building project.
Vulnerability
The timing of any supply-chain is also crucial. We now have a global culture of ‘just in time’ supply-chains where companies don’t need to hold vast amounts of stock in warehouses for long periods of time as this can dramatically reduce their profits.
Tim Cook, the man who had to step into the CEO shoes of Steve Jobs at Apple when he passed away, took Apple to the next supersonic level of commercial success, mainly because he understood the benefits and value of having strong contracts with third-party component suppliers and having fast supply-chains.
He completely transformed the way to products were made.
So, a global supply chain can have significant cost benefits to companies and countries, certainly when it comes to purchasing cheaper products, but the downside is that we are susceptible and vulnerable to global change outside of our control.
Vulnerability and risk for any business is not good.
Even the horrific war that has begun in Ukraine is going to affect global markets, energy prices and certain supply chains.
So, are cheap, global supply-chains the future for the UK construction industry?
We need to ask this question as the industry faces significant challenges.
Net Zero targets
Covid hasn’t gone yet and who knows what global pandemics we may face in the future. The problems around Brexit still haven’t been resolved. The lucrative, global trade agreements that were promised under Brexit aren’t going to be signed anytime soon.
We also now face ambitious Net-Zero/Zero-Carbon targets as well as a new Framework for Environmental Protection with legally binding targets around waste, water quality and air pollution, all of which will affect construction procurement and supply chains.
There is also the Building Safety Bill, which will receive Royal Assent this year and this will fundamentally change how certain buildings are constructed, maintained and made safe.
Alongside all of these challenges the UK construction industry still faces an enormous skills shortage as it fails to deal with the issues around an ageing workforce and recruiting/training significant numbers of new talent.
These aren’t challenges that can be addressed overnight. They are going to take time. But address them we must.
Way more complicated
Constructing a building is very different to manufacturing an iPhone. We shouldn’t really compare what Tim Cook has achieved at Apple with the building industry as they are very different businesses.
It is way more complicated, and more expensive to build a building, which requires land and construction skills on different construction sites, in different locations often at different times all under a complicated planning system. ‘just in time’ and ‘low cost’ might work for Apple and the iPhone, but that doesn’t mean the same model will work for the construction industry.
But, there are things the construction industry should be looking at.
We haven’t embraced the digital Revolution at the same rate as other industries. We’ve made a start, but we still have a long way to go.
We know that off-site manufacturing, prefabrication and automation could radically transform the any we build homes and buildings, but our industry is still very conventional in the way it thinks and builds things.
It struggles to take risks and avoids investing in new ways of building. ‘Design for manufacture’ is a huge opportunity in the UK construction industry, but there are only a few commercial players brave enough to take that big leap.
Local ties
We should definitely be looking at creating strong, new partnerships with LOCAL manufacturers.
It is plainly obvious that having a ‘local supply-chain’ rather than a ‘global supply-chain’ will overcome big transportation issues and will benefit the environment.
But, if we do this, the industry will have to accept that it may needs to offset these vital time/transportation/environmental benefits with potentially higher labour costs.
Building stronger local partnerships, sharing knowledge, information, technology and data between these partners and collectively working to long-term rather than short-term strategies is surely the best way forward.
No long-term plan
I realise that having a long-term strategy is difficult in the construction industry when it is often so turbulent, but then we need to ask ourselves why it is so turbulent?
It is turbulent because there is no long-term plan!
Surely a long-term, well-planned, more stable and steady industry approach with a highly-skilled work force and efficient LOCAL supply-chains, must be better than a short-term, turbulent industry dependant on GLOBAL supply-chains and products needing to be transported huge distances.
This may increase construction prices in the short-term while the industry transforms itself, but it may be a price worth paying because there is nothing more expensive than having low levels of productivity on site because you can’t get your cheap windows, doors and kitchens in time from overseas!
George Clarke is an Architect, writer, TV presenter and Ecodan Ambassador
