Monday, 29 June 2009

Building Our Way Out Of The Recession

By Nick Louth, exclusive to MSN
June 23 2009

In a bid to create jobs during recession, $30 trillion is being spent on infrastructure across the globe over the next 20 years.

This gigantic sum will be put to work to renew roads and bridges, expand airports, build rail lines, fix water pipes and sewers, establish clean energy schemes and generally put right decades of under-investment.

"Governments all over the world are buying jobs. And the infrastructure sector is where many of these jobs will be created," said Benjamin Tal, author of a CIBC World Market report into global infrastructure. Not only will hundreds of thousands of jobs be created, but there will be a bonanza for construction and engineering firms.

Board: When will the economy recover?

UK spending on a smaller scale
However, when it comes to Britain, everything, except perhaps the banking bail-outs, seems to be on a much smaller scale.

Though the government is likely to have £1.2 trillion of debt by 2015, most of that is borrowing to keep health, education and social security spending on a steady path while recession-hit tax receipts sag. While that certainly provides jobs and keeps services going, it doesn't repair the physical structure of the economy.

In last year's pre-Budget report chancellor Alistair Darling promised an extra £20 billion stimulus for the economy. The £3 billion earmarked for infrastructure was actually money brought forward, rather than new cash.

China spends 15 times as much
In contrast, China, whose economy is just a third larger than Britain's, announced a $570 billion (£356 billion) economic stimulus in November, to be spent within two years. That is 15 times larger than Darling's UK package, and much of it will be spent on new infrastructure.

In Russia, a $250 billion road-building scheme was announced in 2008 which would for the first time link up the entire country with 50,000km of high quality carriageway instead of the muddy potholed tracks which are common outside city boundaries.

Indian billions
India is spending $150 billion on building a national electricity grid, just part of an ambitious $700 billion plan to revolutionise infrastructure in the world's most populous nation.

In the US, a third of president Barack Obama's $825 billion stimulus package is going into infrastructure, with $30 billion to be spent on roads and $10 billion going into rail and mass transit systems. In 2005, America's civil engineers gave the country's infrastructure a "D" grade, and estimated it would cost $1.6 trillion to fix it.

Decades of under investment
"The global economy is running a major infrastructure deficit as the cost of decades of under-investment is now surfacing," Tal said in the report.

Nowhere is that more true than here. Britain was the cradle of the industrial revolution and the work of Victorian engineers, despite lamentably little maintenance in the twentieth century, outlasted most expectations.

Crumbling Victorian sewers, congested and worn-out roads, the mainline rail network and an aged Underground system in London are gradually being renewed, but at a funereal pace.

"The British are terrible at maintenance, it's a national disaster," said Joseph Lampel, Professor of Strategy at Cass Business School.

Making trains run on time
The West Coast Mainline upgrade, an £8.9 billion investment, has in theory just been completed by state-run track operator Network Rail. However, commercial train operating companies Virgin and Go-Ahead Group complain that where new and old equipment work side by side there are now more failures. Now, 20% of Virgin trains are late on the route, compared to 10% nationally.

It isn't just upgrades that run slow. New projects can take forever too. The £15.9 billion Crossrail project to link mainline railways east to west across London, has been debated for 30 years, and finally received approval in 2008. Construction will begin in 2010.

China, by contrast, is spending $275 billion on building a spanking new national high speed rail network. In five years' time, China will have more high speed lines than the rest of the world combined.

One advantage of a command economy
Perhaps this is an unfair comparison. China's citizens don't even get to vote, yet alone have a say in where and how major civil engineering projects get built. When the Three Gorges Dam was built across the Yangtze River, 1.24 million people were displaced, entire cities demolished and invaluable cultural sites buried for ever.

By contrast, the planning process for modernising and expanding Heathrow airport moves more slowly than a British Airways check-in queue. When it comes to a third runway and a sixth terminal the cost-benefit analysis of economic growth runs up against noise, pollution, over-crowding and safety concerns.

If it is decided in less than a decade, that will be a record. Maybe that is the price of democracy.

Public transport, but private money?
Yet for all this, much more does need to be done in Britain. Much of it isn't nearly as contentious as Heathrow expansion. A dozen congested cities need a tram or light rail network, vast areas of the country have neither reliable bus nor any rail service at all and are entirely dependent on private transport.

A dozen new power stations are needed to replace old and dirty coal-fired plants, and creaking and unreliable Magnox nuclear generators. The issue has been debated for decades, but the first new nuclear plant is unlikely to begin service before 2018.

Millions of Victorian homes, and many newer council homes, need proper insulation, schools need rebuilding, hospitals need refurbishing. The list goes on and on.

Incentives and plans, but little action?
There are incentives and plans, and subsidies galore for almost everything listed here. Yet, the process of turning government policy into a modern Britain is quickly diffused by bureaucracy, apathy, lack of direction and mixed incentives.

Take home insulation. Homeowners often don't realise that grants are available, underestimate the savings that can be made or can't afford the outlay. While tenants shiver in poor housing and shovel in coins to the meter, their landlords have less incentive to do the building work because they're not paying the gas bills and don't want to turf out paying tenants while work is completed.

On Merseyside, plans for a much-needed tram system were shelved in 2005 after local authorities failed to get central government assurances that the £170 million it would provide would be enough to cover costs.

While cost benefit analysis is now quite capable of capturing the value of external benefits (such as the saved time in reduced congestion) how those benefits are funded and from whom remains a tough question.

Olympian detachment
Yet while such schemes fall by the wayside, prestige projects whose long-term payback is uncertain have gone ahead. The £789 million Millennium Dome in Greenwich, London is a classic case in point of a national white elephant, predicated on over-optimist forecasts of the numbers who would be willing to pay £20 a head to visit.

The next such test is likely to be the London 2012 Olympics. With costs still soaring, having doubled to £9.3 billion from £4 billion within two years of winning the bid, the project it is unlikely to be a financial success. In the history of the games only the Los Angeles games of 1984 managed to make a narrow commercial profit.

The London Games economic outcome will ultimately be judged by the infrastructure and East London regeneration legacy it leaves in its wake. If so, that is good. But it does seem a shame that Britain cannot get as excited about needed improvements in infrastructure for their own sake.

Femi Yusoof BEng, MIET
Capital Engineering Personnel
part of Capital Group

Friday, 19 June 2009

Top 10 Jobs of 2009

By Paul MacKenzie-Cummins for

Each year, we identify jobs that will be in highest demand and there are always the usual suspects from the fields of health, education, marketing and IT. But although these sectors still appear in this year's list, they have been joined a few newcomers whose inclusion -- given the state of the economy -- may surprise you. So if you are planning to change your career or expect to graduate within the next five years, then take a look at the fastest growing jobs in the UK.
Here are 10 jobs predicted to experience the most growth and demand throughout 2009.

1. Engineer
For the second year running, engineers top our list of the highest paid jobs in the highest growth sectors in the UK. With the 2012 Olympics just around the corner and the 2014 Commonwealth Games in Glasgow on the not-too distant horizon, coupled with the biggest programme of regeneration and redevelopment throughout the UK on a scale not seen since the end of World War Two, demand for engineers -- particularly civil, project and mechanical -- is at an all-time high. Demand is so great that some engineers are being paid £600-700 per day.

2. Environmental consultant
When BT announced its plan to cut its greenhouse gas emissions by 80 per cent by 2020 -- some 30 years ahead of the Government's official target -- it sent shock-waves across the rest of the business community. With UK businesses under pressure to reduce their emissions and 'go green', the demand for environmental consultants is anticipated to increase further over the next year as we edge closer to the deadline for all businesses to derive at least 20 per cent of their energy from renewable sources by the year 2020.

3. Cosmetologist
Despite a fall in consumer retail spending over the last two years, there is one area of personal expenditure that is showing no signs of abating: cosmetology. Indeed, the demand for Botox and dermal filling is continuing to grow to the extent that the number of qualified nurses changing their careers to work as independent cosmetologists is causing a drain on the nursing sector.

4. Public relations specialist
2009 is set to become the year of the job hopper in the public relations sector. Open the pages of PR Week and the news is full of stories about senior executives being poached by rival firms. Public relations can flourish in a time of tighter budgets as organisations seek alternative ways of communicating with their stakeholders and target markets other than the higher priced advertising or marketing.

5. Human resource professional
Employment law is an increasingly complex and sensitive subject. If mishandled, it can cost a company a substantial amount of money in unfair dismissal claims. And with a further 600,000 jobs losses anticipated by the end of the year with more to follow in 2010, the demand for experienced human resource executives and managers will continue to increase.

6. Advertising executive
The media sector is constantly evolving. It's becoming more specialised and complex with a plethora of specialised online, offline and broadcast media available to advertisers, from digital TV and social networking sites to newspapers and radio. However, advertisers are spending less and are increasingly looking for more targeted marketing campaigns that will deliver a maximum return on their investment -- and this is the role of the advertising executive. Indeed, Enders Analysis predicts that newspaper advertising will drop by 21 per cent in 2009 along with TV and outdoor advertising which will see a fall of 10 and 7.8 per cent respectively.

7. Teacher
Part of the reason why teaching is one of the most stressful jobs in the UK is because of the severe shortage of people to take the jobs that are available. Despite the lure of a £5,000 'golden hello' and the promise of extensive holidays, the teaching profession has a massive shortfall and vacancies for more than 32,000 new teachers every year in addition to an increasing number of teaching assistants.

8. Accountant
When the economy is turned on its head, as it has done now, investors need to be shrewd and cautious about how best to manage their money: Cue the accountants. And with the increasing number of mergers and acquisitions taking place, demand for accountants to ensure a smooth financial transition process will continue to grow throughout 2009.

9. Counsellor
One man's misfortune is another man's gain. The threat of redundancies, trying economic conditions and a depressed housing market which has seen the value of peoples' homes plummet in recent months, all conspire to create anxiety and stress. This has seen the demand for counsellors reach an all-time high and, with the recession expected to last until the end of 2010 at the very least, counsellors and psychiatrists will one of the most in-demand occupations this year.

10. Data communications analyst
The rapid growth of social networking sites such as Facebook, Bebo and MySpace over the last few years has not only introduced the world to a new method of interactive personal communication, it has also created a new marketing tool for organisations and revolutionised the way in which company's communicate. Data Communications Analysts are responsible for overseeing and maintaining an organisation's internal and external network of communications and they will play an increasingly pivotal role in the economic and social infrastructure or businesses.

Femi Yusoof BEng, MIET
Capital Engineering Personnel
part of Capital Group

020 8605 2800

Wednesday, 3 June 2009

Construction Industry Continues To Suffer From Skills Shortage Despite The Recession

Results from the Chartered Institute of Building’s (CIOB) third annual skills survey show that the industry is still suffering a skills shortage despite the recession and downturn in construction demand.

77% of respondents believe there is a skills shortage in construction and 78% of those feel that the loss of skills will hinder the industry’s recovery when the economy improves.
Michael Brown, CIOB Deputy Chief Executive said; "Construction has been notoriously bad at attracting students, and other new entrants, which has exasperated the industry’s long-term skills development.

"There is no denying the importance of graduate and apprentice recruitment as these employees represent the future of the industry. Over three quarters (76%) of all respondents felt apprenticeships should be mandatory on public projects, which would help to encourage the employment of apprentices. However, economic problems are forcing many companies to recruit fewer graduates and to cut the number of apprenticeships – just to survive.

"There is a danger that once the industry demand rises, and recruitment increases, there will be a mass of previously skilled workers who choose not to return to the industry having opted for other careers. The industry has never fully recovered from the recession in the 90’s, particularly at the management and senior management level. We must learn from those lessons and find ways to put in place the vital skills needed for recovery and beyond."

The sample consisted of 1182 construction industry professionals, the majority (64%) of whom describe themselves as management. 97% of respondents are located in the UK. 47% work for an organisation employing more than 500 people.

Respondents felt that the skills shortage is largely due to companies being unable to afford to employ their workers. 54% of respondents state that their company has had to make redundancies, and 14% expect redundancies to occur.

There is great concern about the number of students entering the industry. 51% feel this factor will contribute to skill shortages worsening over the next few years. The results show that only 12% of respondents are aware of their companies recruiting more graduates, and only 1% are recruiting the same number of graduates as before.

Only 37% of respondents are sure their companies are still employing apprentices. 11% state that their companies usually employ apprentices, but cannot afford to in the current economic climate.

Unsurprisingly the outlook in 2008 was much more optimistic than in 2009. 67% of respondents in the current research expect to see a decline in construction demand in 2009/10; in comparison with 2008 when 69% of respondents expected there to be an increase in construction demand. This clearly indicates the impact of the credit crunch on the construction industry, which has affected the mood of the industry as well as the available skills.

As a result of the current downturn, there has been a reduction in the number of people reporting a skills shortage in this years survey; 77% of respondents say there is a skills shortage, whereas 93% felt there was a skills shortage in 2008. This reflects the decline in construction demand, as well as the decline in workforce numbers, yet the results still indicate a skills shortage.

Last year’s (2008) reasons for the skills shortage was seen as the construction industry being less attractive than other industries. However, this year job cuts and lack of employment opportunities in construction are the main reasons. (Source: CIOB, Thursday, 28th May, 2009)

Femi Yusoof

Capital Engineering Personnel Ltd,

part of the Capital Group