Fears for construction jobs as capital spend down 25%

FURTHER construction layoffs are inevitable as the Government’s capital spend is running 25% behind its budgeted plans for 2010, say quantity surveyors Davis Langdon PKS (DLPKS).

The Dublin-based consultancy also said that construction companies have cut their tendering prices by 30% in the last two years, competing for contracts at “abnormally low” prices simply to keep their staff busy. Greater clarity on the State’s 2010-16 National Development Plan (NDP) would at least allow some of these businesses plan ahead, DLPKS warns.

DLPKS managing director, Norman Craig, says: “There will be more casualties. Builders are coming under pressure due to a lack of cash. They are tendering for jobs at rates that don’t make sense just to keep key staff in employment, but that is just not sustainable.

“People are looking to the State for projects, because the NDP is the only show in town. There’s nothing happening in the private sector, because there’s no confidence out there. Tender prices fell 14% in 2008, 16% in 2009.

“We had thought they might fall by another 6% in 2010, but it now looks like that figure could be 10%. It just doesn’t add up. The prices for steel and other raw materials are going up.”

DLPKS wants the Government to adopt a balanced approach to its spending for the next five years. The firm had predicted in January that the overall construction output for 2010 would be €12bn, down 37% on 2009.

DLPKS has projected a Public Capital Programme (PCP) spend of €6.5bn. That now seems likely to be 25% down, in the region of €5.5bn. With public spending accounting for more than half of all of 2010 building in Ireland, this €1bn underspend spells more trouble for the 150,000 still employed directly in building.

Public construction spending was down across the board: Education is -35.8%; Environment is -32.3%; Health is -25.5%; Transport is -29.1%; with other sectors at -12.7%.