Belfast Briefing: Will Brexit close the Border to northern builders?

Will the fleet of builders’ vans packed with construction workers crossing the Border every week be a frontline casualty of the triggering of article 50?

Industry sources claim that construction firms currently tendering for multimillion-euro deals in the Republic are worried that Theresa May’s push to get the UK’s exit from the European Union under way could make them less attractive than some of their Irish or European competitors in the eyes of some potential clients.

“It is the unknown quantity that is causing most concern,” says one managing director of a Northern Ireland-headquartered firm, who declined to be named for commercial reasons. “We can’t possibility know what arrangements are going to be put in place. For instance, when it comes to regulatory matters (like health and safety, where there is some common ground), if the UK exit will force a rethink on these type of arrangements or, if a hard Border does emerge, if that will result in major problems when it comes to getting our people on site, and also taking building materials from Northern Ireland into the Republic, which can and does happen on a daily basis without a thought.

“Our concern is that organisations in the Republic that may be looking at awarding contracts, which could have a duration of up to five years, will think again about whether possible issues could lie ahead if they give it to a Northern Ireland company because they don’t know what Brexit will bring.

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“All of the unknowns are putting unnecessary obstacles in the way of firms winning new business and there is not a single thing that we can do about it.”

Life-savers

Contracts from the Republic’s building industry have proved to be life-savers for many Northern Ireland construction firms – both small and large – faced with a sharp dip in their workloads during the recession.

Many firms were forced to relocate the majority of their operations to Scotland and England at the height of the recession. According to the Construction Industry Training Board (CITB) in the North, the sector saw output fall by nearly 40 per cent in real terms between 2008 and 2013.

In its Industry Insights report for 2017-2021, the CITB is forecasting that the construction sector should "return to growth" this year despite another worrying dip last year. The report estimates that it could expand by 1.6 per cent in the five years to 2021, almost the same rate as the 1.7 per cent predicted by UK forecasts.

However the chief executive of CITB NI, Barry Neilson, has acknowledged that “output, employment and annual recruitment forecasts are not as buoyant in the North as previously forecast, due to the events of 2016 and the uncertainty of their impact”.

Skills shortage

The training board has also identified a potential skills shortage emerging in occupations such as bricklaying and roofing, two of the trades for which there is also the greatest demand in the Republic.

The possibility of Brexit upsetting the Northern builders’ cross-Border trade with the Republic is not the only problem on the horizon for the industry, according to John Armstrong, managing director of the Construction Employers Federation.

The biggest problem, Armstrong says, is much closer to home and revolves around the lack of a Northern Ireland budget. Armstrong says that many construction firms and subcontractors, without an agreed budget on the table, are operating in a vacuum.

“We have a scenario where a significant number of projects don’t have agreed budget lines mere weeks before the end of the current financial year,” he says. “There are projects scheduled to begin, firms who have won the tender are lined up, and nobody knows if there will be the money there to pay for it. This is desperately worrying for the construction industry and could possibly threaten jobs.

“We need political parties currently involved in negotiations to get a budget agreed, so we have a future to build on.”