Transcript Sector skills insights: construction summary slide pack

Sector Skills Insights:
Construction
Introduction
The UK Commission is working to transform the UK’s approach to investing in skills to
help secure jobs and growth. Key to our ambition is the need to encourage greater
employer ownership of skills, working to secure long term sustainable partnerships.
This slide pack and accompanying evidence report present the case for more employers in
this sector to invest in the skills of their people. It does so by presenting real-life, skillbased business solutions that have been used by leading employers to tackle the performance
challenges they face and by drawing on examples of the investments being made by the UK
Commission through its investment funds.
There are several determinants of employers’ skills needs and training behaviour including firm
size, strategy and location but it is by sector which the strongest variations appear. Hence this
work focuses on the Construction sector. Slide packs and reports are also available for a
number of other sectors from: www.ukces.org.uk Each of the sectors are important to the
economy in terms of employment, productivity or their future potential.
For information about this slide pack and accompanying report please contact:
Zoey Breuer ([email protected]
Source information can be found in the notes section of each slide
Storyboard
What are key
skills challenges in
the construction
sector?
The importance
of construction
sector today
Performance
challenge (1)
Strategic
management
Performance
challenge (2)
Investing in
workforce skills
Performance
challenge (4)
Attracting talent
Tackling these
performance
challenges: Growth
through skills
Imagine where the
sector could be
tomorrow
Performance
challenge (3)
People management
Benefits
to business
3
What is the construction sector?
SIC 41, 42, 43 and 71
The sector covers a wide variety of activity, from building HS2 and
skyscrapers, to housing estates and routine repair and maintenance:
• Infrastructure
• Housing
• Commercial
• Industrial
• Repair and maintenance
The variety of activities gives rise to multifarious skill needs, including:
Skilled trades in:
• Heating and ventilation
• Plumbing
• Electrical engineering
• Welding / metal workers
• Glaziers
• Bricklayers
• Carpenters
Professional and managerial
skills related to:
• Civil engineering
• Structural engineering
• Construction management
• Surveying
• Financial planning
• Architecture
4
What Key Skills Challenges are being
Faced Overall
The sector is highly cyclical – after every recession the sector
tends to lay off skilled workers who then prove difficult to recruit
during the recovery period. This gives rise to skill shortages and
wage inflation which, in turn, can inhibit recovery. Cyclical effects
are exacerbated by the high levels of self-employment in the
sector.
A key challenge for the sector is to maintain its supply of skills,
especially during periods of weak demand. The signals to
individuals are generally positive – that skills acquisition in
construction skills is associated with relatively high rates of return.
The evidence suggests that employers recoup their training
investments quite quickly once apprentices complete their training.
Investing in training is a win-win for employers and employees.
Whilst the evidence should not be exaggerated, the age profile of
the sector suggests that there are relatively fewer younger people
in the workforce, and that the number of entry level training
positions has declined following the recession. The key
challenge, therefore, is to even out the supply of, and demand for,
construction skills - the importance of this should not be underestimated given the significance of the construction sector to
economic recovery.
Construction matters
The sector today
• Third largest UK sector by employment, 2.9 million workers (9% of UK workforce)
• Value of output 81 billion in 2008 almost double the figure in 1999 (6% of UK GDP)
• One of the largest construction sectors in Europe (by employment,
enterprises, and gross value added)
• Skills of the workforce and wages higher than national averages
• Relatively high levels of self-employment at 38% and accounts for 15%
of business start-ups.
• Productivity has risen by over one third between 20022009, £58,000 GVA per head (£37,000 whole economy)
• Productivity per employee is higher than France and
Germany but trails the US. Weaknesses in productivity are
apparent in some sub-sectors e.g. engineering construction
• Investment per head employed (£4,400) higher than
European average
• UK companies have been successful in capturing export
markets - export value £1.22 billion (2010) - but more
services were imported than exported. There is potential to
expand into export markets [Case Study]
Construction Matters:
The Recession and Prospects for Recovery
The recession has hit the
industry hard...
... but the medium-term prospects
are encouraging
• The sector peaked in 2009 at almost 2.9 million
but fell by six per cent to just under 2.7 million in
2010. This fall was by far the largest in absolute
and percentage terms across all sectors.
• The sector’s reliance upon self-employment
tends to make employment sensitive to the
economic cycle
• There is evidence that employers have tried to
avoid laying off skilled workers in order to retain
capacity (leaving them well-placed for recovery)
• There has been a fall in training levels and a drop
off in Apprenticeship starts and completions
• Wages and profits have been squeezed due to:
• competition between job applicants
• competition between firms
• price of materials
• In previous recessions skills have constrained
the eventual recovery
Construction is central to policy
initiatives which are designed to bring about
economic growth in the economy more generally
(e.g. infrastructure projects)
•
But the recovery is more drawn out this time...
– ...and skill shortages could constrain
future growth if training investments are
not made now
– Employment and output not expected to
recover to pre-recession levels until after
2014 [Chart]
– In the recovery period, construction will
need to rise to a number of performance
challenges
However, the global
market is forecast to
grow from 4.5bn to 7.5 trillion by
2020... and UK Construction must
be ready to capture its share...
The Performance Challenge:
Challenges for Construction
Sustainability
Different materials for
new builds, retrofitting, etc. require
enhanced skills and
new skills. Low
energy requirements
introduces increased
need for specialist,
technical and
professional skills.
Technological
Change
Modern methods require
upskilling, reskilling and
multi-skilling. Use of more
off-site construction
brings about a shift in the
mix of skills required.
Automated tools requires
new skills and makes
some redundant.
Demographic
Change
Ageing workforce.
Key skills can be lost
through retirement.
Young entrants need
to be attracted to the
industry.
Globalisation
Increased
international
competition and in
turn demand for
higher skills.
Globalisation has
driven up supply of
labour and skills.
Provides increased
export market for
goods and services.
Investing in the workforce
All the challenges point towards a need for continued investment in skills at all levels and
investment in new skills in response to technological developments. Higher level skills
especially will be needed to meet the complexity of the competitiveness challenge
(skills + technology + globalisation).
Construction matters:
Imagine where it could be tomorrow
• A world leader in the development and adoption of new
technologies with relatively high levels of working in
partnership with innovators in, for example, higher
education
• The sector which leads the way in the transition to a low
carbon economy
• A sector which has acquired strategic management skills
to manage innovation, supply chain relationships,
and entry into international markets, etc.
• Starting from a strong base, the sector utilises high
performance working to consolidate the sector’s
position as one of the strongest in Europe
• A sector which has developed the people management
policies and practices which will attract and retain a
wide pool of talented people
•
•
•
Firms and individuals invest optimally in their skills
The sector recognises talent as a source of competitive advantage. The sector provides
clear career pathways which allow people to develop their careers within it at all levels of the
organisation
Employers collaborate on, lead and own skills solutions to the sector’s performance
challenges in pursuit of mutual gain
The performance challenge
Strategic management
Strategic Challenges:
•
•
•
•
Low carbon skills need to be embedded across the sector, the primary driver being the Green Deal but
also the opportunity to compete globally - Case Study
Innovation requires investments in R&D and establishing effective R&D partnerships
Technological change has implications for development and management of supply chains
Operating in an international market introduces challenges to work across different national territories
Requires quality and capacity of strategic management to :
•
•
•
•
•
Make informed decisions on investment in R&D and new technologies
Develop strategic alliances to bring about effective R&D (e.g.
partnerships with higher education)
Develop supply chain relationships and manage the procurement
process – including those across international boundaries
Capture export markets
Plan for and manage the resulting changes to human resources and
skills
Employers continue to
develop their managers
with more than half
providing training or
development for managerial
staff over the last year
(2010/11)
Management quality in the
construction sector has been
improving - in 2007, 14%
of management had no
qualifications whilst in
2010/11 just 7% had none
Small firms have a key role in
construction yet they are
reluctant to take on trainees
when output demand is
uncertain.
Strategic leadership is
needed to manage supply
chain skills as well as the
pipeline of skills within firms
– case study
Much of the future
demand will
be for construction managers
and professionals,
especially new job openings.
Case study – ModCell
International markets
The company
ModCell specialises in modern methods of construction - in particular the production of straw bale,
pre-fabricated panels, which allow for the construction of large scale, zero-carbon buildings.
The timber frame panels are filled with locally sourced straw or hemp and are constructed off-site in
‘Flying Factories’, often in farmer’s barns close to the build projects. The panels provide better
thermal insulation than their more traditional counterparts, resulting in up to 80 percent reduction of
heating bills.
The ambition
With the green agenda becoming more prominent
globally, and with ModCell’s development of a
system designed for large-scale use, it was
obvious that the company’s UK success could be
emulated oversees. The US was identified as a
key market and the company started to formulate
plans to establish international licences for its
modular design panels.
The approach
In 2010, ModCell engaged with the Passport to
Export programme which includes a skills
assessment and skills-based programme to tailor
training, planning and support to company need.
After just three years of trading in the
UK, Bristol-based green technology
firm, ModCell, launched an office in
San Francisco in 2011.
In 2012, ModCell® was awarded the
Britweek UKTI Design Innovation
Award at a event celebrating British
contributions to California.
Case study – Stepnell
Skills strategy for a supply chain
Company
Stepnell Ltd, a family owned building and civil engineering contractor with a 140 year history. Stepnell
Ltd, who place a great importance in employing trained, progressive and competent individuals has
come together with key West Midlands partners to participate in this training initiative and create a
model of best practice in terms of developing and delivering skills.
Approach
Stepnell is registered with ConstructionSkills
and is working towards accreditation with
Investors in People.
The Minster College Training Initiative is the first
‘Mini Academy’ scheme of its kind to be run in
the West Midlands and aims to:
•
have a fully
qualified
Supply Chain to CSCS
or equivalent standard
•
provide work
experience and other
career related
opportunities to the
Minster College students
and the wider community.
Part of The Minster College Training
Initiative is to help our entire
supply chain, not just those
involved with the Minster College
Project, identify training needs
and source that training.
Stepnell understands
that our Supply
Chain deliver our
promises and
maintain our
reputation as
"best in class".
The performance challenge
Investing in workforce skills
The sector has a strong demand for skills at Level 3 and above. Indeed, the share of
workers with NQF 3 or above has increased whilst the share with NQF 2 or less has fallen.
Only the share of skills shortages and skills gaps for skilled-trade workers are
disproportionately high compared to the economy as a whole. The share of skills shortages
and skills gaps for all other occupations are closer to UK levels.
Skilled trades, typically at Level 3, are the single biggest occupation in the sector and will
continue to do so over the medium-term.
Typically the technical skills needs comprise the traditional skills associated with each subsector, BUT technology will bring:
o changes in the production process
o greater complexity and sophistication in the design of buildings
This will result in required on-site skills changing: e.g. piecing together ready-made
components, ensuring sophisticated systems work, using new materials
But , it is also apparent that economic downturns constrain investments in skills in
construction. Could this be storing up problems for the future?
• Nearly all employers indicated that at least one employee will require training in the
next 12 months
• Potentially, the high levels of self-employment constrains training activity
• Employers report issues with the relevance and appropriateness of training
The performance challenge
Investing in workforce skills
Trainers
Non-trainers
The evidence on training investments is mixed:
Construction
53
47
• In the past 12mths the percentage of employers
providing training is below average:
– But, regulation is a driver, 72% of training
Whole economy
59
41
employers provided H&S /first aid training.
• Looking at who received training, in the past 12mths, 52% of employees did not receive training,
higher than the economy average.
• But where training is provided the indicators of quality are good:
– Of the employers who provided training 47% train towards a qualification (43% whole
economy), and the spend per employee and per trainee is higher than average.
– More construction employers have, offer or plan to offer Apprenticeships than the whole
economy average. However, Apprenticeship starts have been shrinking.
But, where employers invest in skills they have strong messages about their benefits:
• National employers are proud of their skill development programmes, including
Apprenticeships [Case Study] and engagement with the National Skills Academy [Case
Study]
• Where employers invest in Apprenticeships, the upfront costs may be high, but employers can
recoup these investments quickly once the apprentices complete their training
• The signals to individuals are positive too with relatively high returns to individuals who
obtain Level 3 qualifications in construction
Apprenticeships are a WIN-WIN for individuals and employers
Case Study – Barratt Developments Plc
Investment in workforce skills
The Company
Barratt Developments Plc is one of the nation’s largest housebuilders
with more than 4,000 direct employees and 25 divisions throughout
Britain.
The Approach
In response to a shortage of skilled trades and the need for future
talent, Barratt, together with ConstructionSkills, has invested in and
developed ‘The Barratt Academy.’
The Benefits
As a result, the company has experienced recruitment and
selection cost savings and their apprentices regularly contribute to
achieving NHBC Awards. Its programme shows a clear progression
pathway with some of their apprentices achieving Director status.
Apprenticeship
Awards – Highly
Commended
Large Employer
of the Year 2011
HOUSES
Academy training programmes have equipped managers to work
This training has
with greater confidence and enabled them to deal with the
resulted in more
unexpected situations that arise on site daily. Site managers have
developed a calmer approach, have become more aware of how they
efficient sites
are perceived on site, and consider the broader pictures when making
with reduced
decisions, developed improved communication skills and are able to
abortive costs.
motivate the teams on site more effectively.
Back to Challenge
Firms in the UK that don’t
invest in training.......
In the
Transport &
Comms sector
are
twice as likely
to fail
In the
Manufacturing
sector are
twice as likely to
fail
Are on
average
twice
as likely to
fail
In the
Construction
sector are
four times
as likely to
In the Hotels & Restaurant sector
are
nine times as likely to fail
In the Retail &
Wholesale
sector are twice
as likely to fail
fail
Training raises firm
survival and
performance rates
Costs of skills mismatches
Despite the substantial investments in
skills, skill mismatches continue to
adversely affect the sector
• Skills gaps among existing staff
are reported by employers to lead to increased
workload for other staff (78%), increased
operating costs (45%), difficulties meeting quality
standards (40%) and difficulties introducing new
working practices (38%).
• Where employers experience hard-to-fill vacancies the
knock-on effects reported by employers in the sector include: increased
workload for other staff (82%), lose business to competitors (50%),
increased operating costs (50%), delays in developing new
products/services (44%) and have difficulties meeting customer service
objectives (42%)
Though much is being done, more needs to be achieved to avoid the
further damage to this important sector
The performance challenge
People management
The strong messages about the relatively high returns to employers and employees
investing in skills is good news for the sector – but this can only be capitalised upon in the
context of good people management practices to provide an attractive environment in
which to work.
People managers are key to:
• Attracting a diverse range of talent
• Providing good working conditions (not just about compensating wages)
• Providing and supporting career paths
• Investment in skills development at both initial and continuing vocational education and
training.
• Skills utilisation matters. Employees with skills gaps is below average, however, 42% of
employers report employees who are over-qualified or over-skilled for their role, affecting
17% of the workforce.
Effective management can contribute to skill utilisation
• Establishments with formal processes for identifying ‘high potential’ individuals
is half that of the all economy average (7% compared with 14%)
• However, on other indicators of high performance working (variety, discretion and
flexibility) the scores for construction are above the all economy average
• Effective resource and people management have been found to be critical
success factors in collaborative research and development projects in
construction.
Construction
companies
have
demonstrated
this can be
achieved
[Case Study]
Case study – Costain Group PLC
Nurturing talent to develop people and support progression
The Company - Costain is an international engineering and construction group focused on providing
intelligent solutions to meet national need.
The Approach – Costain seeks to develop skills and build awareness within the workforce, from managers to
site operatives and runs several highly successful initiatives, including:
• programmes to identify future leaders and develop their talents
• progress for ALL staff using the performance and talent management cycle
• information to support progression through talent and development programmes.
Costain actively incentivises skills development , for example the annual
‘Celebrating Success’ awards to reward staff and a financial reward
scheme for employees achieving key milestones within their careers.
In 2011, 442 employees engaged in further study from NVQs to MBAs.
The Benefits
Creating an environment where skills development is genuinely valued has, in turn, led to employees
becoming increasingly proactive about their professional development. Training has improved
employee satisfaction and engagement as employees feel they can develop their career.
Better training
Overall, by 2010,the
In
2011,
staff
Increase in
contributed to a
Staff turnover
number of people
internal
engagement
35% reduction
in 2011 was
employed from the
increased
by
promotion
in accidents in
local area increased
only 7%
2%
- 166 in 2010
4 years (08-’11)
from 100 to 249
“This makes us an attractive employer to join, and motivates our team members to continue with us, as
they feel they have a clear career path, and opportunities for internal promotion. Our senior managers
act as role models for junior staff, especially the fact that two of the current Executive Board joined Costain
as graduates, and have worked their way to the top of the company.” (Costain)
The performance challenge
Attracting talent
The outlook for the sector is 1.3 million job openings (2010-2020)
• This includes a growth of 300K new jobs at high and intermediate skill levels.
• Demand for intermediate skills, particularly in skilled trade roles, is expected to
continue in the medium term
Given the age structure of the sector, it is not surprising that the majority of these
prospective job openings are explained by the turnover of older employees
• While the age structure is similar to the all economy average, 80% of construction workers
are between 25-59 years and, as such, replacement demand is expected to be 38% of
base employment .
The focus on the pipeline of skills, particularly younger workers, coming into the
sector is therefore of growing importance – case study.
Recruitment of YP is below average 22% (24% whole economy)
Vacancies as a proportion of employees are the same as the economy average (2%).
• However, the share of these vacancies which are hard to fill is much higher for the
construction sector, 40 % compared with the economy average of 23%
• Migrant labour has been an important source of labour supply which has offset
skill shortages, but this is a potentially unreliable source over the medium term.
There is a need to consider how the sector can become a destination of choice for a more
diverse range of people than currently to ensure choice and quality of applicants .
Women, for instance, are under represented in the sector at 13%, especially in high skill roles
Case study – IiP at Beard Construction
Attracting talent, investing in skills and progression
The Company
Over the past ten years, Beard’s turnover has grown from £18m per annum to £46m per annum. In spite of
the recession Beard is maintained a 20% return on shareholders’ capital. They achieved their growth with the
same core management team, and only a small increase in staff.
The Approach
Construction company Beard has used Investors in People for ten years to help them get a total view of the
business and work on the most important areas. From originally taking three attempts to achieve the
Standard, Beard excelled and achieved Investors in People Gold. Beard increased the range of training on
offer, including management and customer care.
“Our staff see that we’ve made
an effort and that Beard is a
good place to work. So,
for example, because they know
project delivery is central to our
success, they will work
weekends and work late to make
sure they deliver.”
Mark Beard
Staff turnover has fallen
from around 15% to an
average of 8%.
“The expectation is that you’re going to
remain with the company. And we’ve
become a magnet for good
people.”
Mark Beard
The Benefits
They believe that Investors in People has helped them to achieve a much higher discretionary effort from their
people, which has contributed to their growth and improved their customer retention. Beard also believes that
IiP and the practices this has instilled in the company has helped them withstand the changing conditions of
the recession.
Growth through skills
Securing future success
The talent pipeline into the sector is being improved through:
• A training levy collected from employers which is returned to the industry through training grants
• A de facto licence to practice operates in many parts of the sector with respect to skills (e.g. the
ConstructionSkills Card Schemes which many employers abide by)
• ConstructionSkills provides a number of products and services including:
• The National Construction College - the largest construction college in Europe, providing
quality and affordable training to 30,000 workers each year.
• Supports apprentices – matching them with an employer and training them at flagship
colleges throughout the UK. Apprenticeship programmes had a 10% higher completion rate
than the national average. Last year, 77% ConstructionSkills apprentices completed their
framework.
• Delivers the National Skills Academy which is a project-based training concept that is tailored
to helping clients and contractors to get the right skills where they need them - on site.
• BIS case study research of the net benefits of Apprenticeship found the typical pay-back period for a
level 2+3 Apprenticeship in construction was 2years and 3 months (10 case studies), with the total
indicative cost around 45K but the net cost 23K (or 26 when accounting for dropout)
• Growth Review implementation update – to stimulate and enable growth
Measures include: support for demand through tax rules, release of public sector land, reforms to
public sector procurement and regulation requirements for zero carbon homes; and then wider
measure such as publishing long-term plans to help inform employer investment in skills.
Growth through skills
Securing future success
•
•
Across the sector, raising skills is key to raising performance, but while there is no silver
bullet, a mix of actions which push and pull in the same direction can help.
Employer leadership in the development of solutions and then taking ownership of those
solutions is fundamental to their success and sustainability.
Sources of investment are available to support the implementation of solutions led by
business on behalf of the sector.
•
The Employer Ownership pilots offers all employers in England direct access to up to £250
million of public investment over the next two years to design and deliver their own training
solutions.
•
The Growth and Innovation Fund (£9 million invested so far, £29 million to invest in 2012-13)
gives priority to solutions for the sector e.g.:
•
Employer commitment and investment in Apprenticeships
•
Creation of employer networks to overcome skill problems
•
Employer-backed proposals for other skills solutions such as: management and leadership;
professional standards; high performance work practices incorporating people
development (e.g. Investors in People).
•
Information and business advice is also important as a solution.
Ultimately this is trying to catalyse sustained investment in the development of the sector’s
workforce led by employers which lies at the heart of an enterprising and dynamic nation.
Investors in People provides a framework in which employers can develop workforce skills which has
proven to be a success in construction. The example of Beard Construction illustrates the benefits of23IiP.
The Key Messages
•
•
•
•
•
•
•
The construction industry is large in terms of employment and output, and fulfils an
important functional role in the development of the built environment and, more latterly,
meeting the low carbon agenda.
The sector will be central to the UK’s recovery from the 2008/9 recession through its role
in bringing infrastructure projects to fruition.
Challenges facing the sector include: the low carbon agenda; need to drive up productivity
to retain and build on its share of UK and world markets; to lead on innovation and
manage change; and meet regulatory standards.
Technological change and the green agenda will continue to impact on the skills
needs in construction. Modern methods of construction and the implementation of low
carbon systems and materials will require new skills and adaption and upgrading of the
skills of people working in the sector.
Skills can help the sector to step-up to these challenges, through:
– investment in management skills
– attracting and retaining talent
– investing in workforce skills, especially self-employed workers.
Meeting these skills requirements will leave the UK construction sector well-placed
to capitalise on the opportunities presented.
To help with labour supply planning in construction, the Government is signalling upcoming
infrastructure projects to provide a more stable environment in which employers might
make investments in physical and human capital.
Work with employers to transform the UK’s approach to investing in skills of its people
to secure growth and prosperity. More information about the UK Commission’s
investment funds is available here.