How will the UK construction supply chain reset and re-invent itself as it emerges from the ravages of COVID-19?

At the turn of 2020, COVID-19 was a largely unknown term, and one that barely featured in the vocabulary of the political and commercial world, let alone being a factor that determined strategic direction and attendant operational activities; now we hear of little else.

The construction sector, characterised by long and fragmented low margin supply chains, was a part of the economy likely to be quickly and heavily impacted by the pandemic outbreak. This proved to be the case, with construction activities hastily suspended and many sites closing voluntarily to meet social distancing requirements.

The sector is widely known for having systemic weaknesses including fragmentation, a multi-tiered structure, low net profit margins, poor cashflow and generally weak balance sheet strength. The high level of intellectual property often locked in lower levels of the supply chain, together with a slow adoption of digital technologies and other factors, has left the sector poorly equipped to handle the pandemic and any future significant downside events.

In addition, with no clarity as to a definitive time point when operations can return to a comparative normal, this will inevitably catalyse changes in ways of working and behaviours across the sector to enable short-term survival and hopefully longer-term prosperity. Though the unprecedented circumstances mean that it would almost be foolhardy to try and predict what a new normal will look like, the situation perhaps does provide an opportunity to redefine strategies and roles that can be enacted by members of the supply chain that will ideally offer greater resilience to the sector at large.

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If you require any further information, please contact:

Harry Colledge – harrycolledge@hka.com

David Moss – david.moss@dlapiper.com

Gary Forde – gary.forde@uk.gt.com