Industrial Construction Contracts Pass £7bn for 2019

THE TOTAL VALUE of industrial construction contracts rose by 11.2% in 2019, up to £7.1 billion according to research by Barbour ABI.

The rise also puts the total value of construction contracts in the sector 20.1% higher than 2017, with the £7.1 billion figure comparable to the level seen in 2015.

The leading sub-sector within industrial construction was logistics, storage and distribution, with other higher value contracts awarded in R&D and the chemical and petrochemical sub-sectors.

Regional picture

The leading region was the South East with a share of 20.4% of contract awards. This is an increase of 8.0% on 2018.

The second largest region was the East Midlands which was responsible for 12.3% of industrial contract awards during the year. However, this represents a decrease of 7.5% when compared to 2018.

The third largest region was the North West which accounted for 11.9% of awards which is 0.9% ahead of 2018.

Contracts in the pipeline

Contracts in advanced planning

Despite the significant growth in 2019 compared with 2018, 2020 could see contract values slipping back. Detail planning activity for the industrial sector decreased by 5.0% in 2019 but this follows 4.4% increase in 2018.

Total value of projects achieving advanced planning was £8.0 billion, returning to around the same level as 2017.

Tom Hall Chief Economist at Barbour ABI

Tom Hall, Chief Economist at Barbour ABI and AMA Research said, “Future growth is likely to be centred around the distribution, storage and logistics sectors which continue to benefit from the need by the retail sector to provide the infrastructure for online purchases.

“In addition, the current Government has made commitments to maintain its support for spending on research & development initiatives as well as pushing forward with the development of the Northern Powerhouse.

“In the past, most of the distribution growth has centred on the East and West Midlands. There are some signs that this growth is now spreading to the rest of the UK as distribution networks mature.

“Away from the distributive trades other drivers for construction output growth for both new work and RMI activities will include the food processing sector.

“Running contrary to this, the steel and coal sectors are unlikely to experience significant output gain into the medium-term.”