This article is one of a series that considers the employment and economic value of various sectors of the Lancashire economy. Please see the sector profiles introduction page for details of where we derive the employment and gross value added results, plus how we identify various organisations in Lancashire as belonging to particular sectors.
The BRES results fit the 2007 version of the standard industrial classification (SIC) and the construction industry covers the codes 41.10 to 43.99.
The economic value of construction
Gross Value Added (GVA) is generally regarded as the best measure of the sum of economic activity within an area. Local estimates of gross value added (GVA) are published by the Office for National Statistics that are split by various industrial sectors. The estimates of GVA for 2014 reveal that construction accounted for £2,125 million which represented 7.7% of the total GVA figure for the Lancashire-14 area.
Figure 1. Construction industry employment by Lancashire local authority area, 2014
Source ONS – Business Register Employment Survey
The construction industry is an important employer in the Lancashire-14 area (see Table 1). In 2014 there were estimated to be 35,200 people in employment in the sector or 5.6% of total employment in the Lancashire-14 area. At the national level, the figure was 4.6% allocated to the construction sector. Table 1 emphasises the fact that full-time employees account for the vast majority of workers in the sector.
Table 1 Construction industry employment profile, Lancashire-14 area, 2014
|Employees and working owners||---|
Source ONS – Business Register Employment Survey
The construction industry is highly mobile with workers deployed across local authority and regional boundaries to support projects, sometimes many miles from their official paypoint or place of permanent residence. More than any other sector of the Lancashire economy, the construction results probably present the largest discontinuity between a person's registered place of work, their actual working site and the local authority in which they live.
Figure 1 dramatically emphasises the concentration of employment in South Ribble district. With 10,400 in employment, the authority has a very substantial 29.6% of the total employment in Lancashire allocated to this sector. No other Lancashire authority has anything like the same number of jobs allocated to construction as South Ribble. Preston, with 4,000, has the second largest number, whilst West Lancashire with 2,700 was in third position.
Other examples of important construction sector employers in other Lancashire authorities include Clement Dickens & Son, Barnfield Construction, J Wareing & Son, RE Buildings, RP Tyson Construction Ltd, Bachy Soletranche, B&E Boys, John Turner Construction Group Ltd., BAAS Construction and F Parkinson.
Volker Stevin Ltd is a national civil engineering and building contractor that has a very important presence in the county. It has a base on the White Lund Industrial Estate in Morecambe and offices in Preston.
Thornton Sports Ltd in Altham is involved in the manufacture of sports surfaces, and is classified as a specialist construction activity.
The Department for Business Innovation and Skills is responsible for the collection, analysis and publication of statistics on the construction sector. The results provide some useful context material, with up-to-date prices for a range of construction materials. The figures include quarterly results for the sale of sand and gravel for the 14-authority Lancashire area.
The construction industry is both a large and diverse sector making an important contribution to economic activity. It is typically defined in terms of the stages of construction processes which are undertaken. These range from demolition and site preparation, through general construction and repair of both residential and non-residential buildings. Civil engineering works (including highways, roads, airfields, harbours, utility works, etc) and installations (electrical, plumbing, insulation, etc.) through to completion (including trades like plastering, on-site joinery and carpentry, flooring, painting and glazing). In practice, many large and medium sized construction firms may operate in several or even all the different levels in the industry. There are however, a large number of specialist firms who work mainly as sub-contractors in respect of new construction projects but often as main contractors for repair, maintenance and improvement work.
Construction is labour intensive industry, but the sector does respond to technological changes, the growing requirement to recycle old building materials, and the use of novel materials and construction techniques. Research and development, training and quality management will always be key factors in the future development of the industry.
The need to repair, maintain and alter the existing built environment means that the industry has to preserve a competence in older technologies. Its activities thus comprise a wide mix from traditional labour intensive site-based crafts to sophisticated industrial technologies. As construction projects become increasingly complex there is a need for multi-disciplinary working and transferable skills.
This diversity is reflected in the range of company types operating in the construction sector that include:
- Main contractors, often larger multi-disciplinary companies offering an integrated service from design, right through the construction process to the completed project.
- Specialist contractors, ranging from piling contractors to painters and decorators, mainly in the installation and completion trades, who may operate over a wide range of geographic markets.
- Small contractors active in building and/or civil engineering work in a local market or a specific market sector, e.g. house building. They may work as a major contractor using sub-contractors and self-employed craftsmen.
- Self-employed craftsmen who may be registered as small firms and work with family members or casual help. They will also swell the number of family owners allocated to the construction sector.
- Opportunistic start-ups by individuals, or partnerships, who are made redundant or seek more independence than working for a larger firm, or craftsmen expanding their range of activities. They will also swell the significant number of family owners allocated to the construction sector.
Construction activity is largely investment led and in the short-term is sensitive to interest rates, levels of public expenditure on capital projects, and the business cycle generally. Over the longer term population and economic growth primarily determine construction activity. In turn, the activities of construction have strong multiplier or knock-on effects elsewhere in the economy.
Page updated October 2015
Page amended 26 November 2018
Page amended 4 May 2021