With the UK’s rate of inflation holding at 3.8 per cent, Ryebridge managing director Sean Scully was invited onto the BBC’s Five Live Breakfast to discuss the impact on the construction industry.
Presenter Rachel Burden told listeners that Ryebridge specialises in civil engineering in airports, ports and NHS hospitals, and asked Sean how the national economic picture was affecting the company.
He said things are challenging generally for the construction industry, but it was the rise in the cost of living for their employees which was taking the biggest toll as Ryebridge tried to ensure staff could keep up with soaring prices.
“What we’ve seen is a massive increase in wages since 2020, with rises of 25 per cent up to 45 per cent for people still doing the same job.”
Rachel asked if market demand was also pushing prices up due to a shortage of construction workers across the country, and Sean said there were loads of different factors at work.
“I think what we've tried to do as a business is be very specific about the things we're good at.
“We're very successful in operationally sensitive areas, like airports, ports and hospitals. We were the civils contractor on the groundworks for the new Tottenham Hotspur Stadium and again that's an operationally restrictive area.”
He said in order to survive and thrive as a company, Ryebridge has had to become operational specialists, although this did not mean charging a premium for their services.
“I think what we try and do is work in areas where we know we can be successful and can do a good job, because ultimately, to make money out of jobs, you have to make sure you deliver a programme; for example, we’ve just finished a job in Southampton and handed over an area that the port can trade in three weeks early, which is obviously brilliant for everyone.
“But it's an area that we understand and it's a role we can do, and I think strategically as a business it’s about focusing on the things that we're successful at.”
Rachel asked about the cost of building materials in recent years, which has filtered down not only to large scale projects but even small housing improvements.
Sean said: “There are lots of different factors which affect how the price of materials have gone up, obviously Brexit, the cost of steel after the Ukraine-Russian war, and the cost of living impacts on us all.
“We use local suppliers wherever we are working, but with the rise in the cost of living not just our costs go up, but everybody else’s do too. Businesses are run to make money, and the only way they can look to do that is to increase the cost of the products that we build with. It's a bit of a perfect storm, unfortunately.”
He said construction companies also enter into fixed price agreements where clients cannot take into account inflation, so costs will go up during the course of the job.
Yet despite all of these challenges, Sean stressed how Ryebridge has been relatively stable as a business for the past few years.
Sean added: “Coming out of COVID was particularly difficult for us being in airports, and that's when we started working in hospitals and other areas.
“But there are still additional challenges that affect all businesses, like National Insurance, how VAT is managed, and there are lots of other complexities in the construction sector, as you'd imagine.”
