6 minute read
Calm after the storm
Calmaft er the storm
Aft er the excitement and uncertainty of last year’s referendum, Scotland is quietly returning to normality, and pushing on with its economic recovery. And electrical contractors are doing the same
By Adrian Holliday
> Newbuilds are keeping Galloway Group electricians busy
After the excitement of the referendum, the Scottish economy remains at a crossroads. Private investment is starting to pick up, unemployment is falling, and many electrical contractors are being supported by a surge in the housing market, especially newbuild. But estate agency Savills recently warned that the Scottish property market is likely to underperform compared with the rest of the UK for the next five years.
For many contractors, there’s plenty of pressure lurking: wages are rising and skills shortages remain acute, according to recent Off ice for National Statistics data. But how much are the headline worries really reflected on the ground?
Newbuild confidence
Let’s begin at the Dundee off ice of Bruce Bisset, a director at Galloway Group, an engineering and electrical solutions operator. In total, Galloway employs around 250 people, with 20 electricians on the books and a strong presence in the newbuild housing market. “We are seeing an improvement in business, certainly since 2009,” says Bisset. That year was grim. The workload dropped dramatically, with turnover sinking to £1.25 million compared with £2.5 million in 2008. “We had 40 electricians, but had to cut down to 15,” he recalls.
Looking ahead, a skills shortage is frustrating, especially when certain hotspots – Aberdeen’s oil and gas industry being one – put pressure on costs. “The oil-related business there means wages are very much higher, although that may change as the oil price goes down,” he says. Oil prices have dipped by 30 per cent since mid-summer due to lower demand and an abundance of supply.
But the skills issue, and the lack of local labour, is irksome. “It’s a struggle to find staff ,” he says. “We’ve put countless adverts in magazines, online and other recruitment places.” Currently they have two apprentices and an adult trainee – an area Bisset increasingly wants to focus on. “They’re a bit more mature, although they’re also hard to find.”
Galloway is sticking to the newbuild market. It’s had some experience with student accommodation, but the margins are tighter. Despite government rhetoric, the renewable or “green” element still isn’t really there. “Not a lot of renewables go into newbuild yet,” says Bisset. “We did look into solar panels 10 years ago, but none of the housebuilders were prepared to include it, to keep costs down. But recently we received an enquiry that does have a requirement for photovoltaic (PV).”
Planning ahead
Crossing the Tay and turning south-east, we head for St Andrews. Connections last talked to Ronnie Grant, owner of R.B. Grant in 2012, which at the time employed 50 people. Grant was getting through the recession with some diversification; public sector work was getting tighter. Now, things are better –
> Kirkcaldy-based Kilmaron Electrical
Economic focus: Scotland
Scotland is Better Together, for the moment. Strathclyde University’s Fraser of Allander Institute predicts economic growth of 2.2 per cent in the next year, with unemployment falling.
Recently a huge urban regeneration project – the Rosyth waterfront project in Fife – was unveiled, promising 3,500 jobs and £500 million in investment. A new £400 million bypass to the west of Aberdeen has helped the construction industry, as has a controversial £300 million on-shore Highlands wind farm, the Stronelairg 67-turbine scheme.
However, corporate insolvencies have seen a slight rise, according to KPMG, with small fi rms seeming to be particularly vulnerable.
2.2 PERCENT:
Predicted economic growth for Scotland in2015
the staff count is up to 55 – particularly on the council side. “We’re already securing jobs for later this year and there has been a return to spending over a three to four-year period,” he says.
For him, this means he’s able to plan ahead in a way that wasn’t possible even 18 months ago, such as taking on more apprentices or buying vehicles and plant. Currently he has 14 apprentices on the books (two years ago he had 12). “We’re intending to push that towards 20 in the next year,” he says.
On the capital spend front Grant has a 30-vehicle fleet – everything from a Fiesta van to a heavyweight Volkswagen LT. “We have considered electric vehicles, and there are grants for them, but the selection isn’t huge,” he says. “When it becomes more competitive, we’ll look again; the infrastructure isn’t quite there yet either.”
And he should know. R.B. Grant has been involved in some of the charging installations. Meanwhile, construction growth in West Lothian, Perth and Dundee is helping things along, as is PV work, helped by zero-interest loans of up to £5,000 for Scottish customers, for 100 per cent of costs.
Steady growth
Next, let’s move 23 miles south-west to Kirkcaldy. Colin Mirrey, owner of Kilmaron Electrical, has been in the electrical contracting business for 35 years. He employs several staff , including two apprentices, and currently turns over £375,000.
Business is strong, which he attributes in part to avoiding main contractors. Mirrey also has no public sector work. He has an increasing responsibility for a pub and hotel chain – ongoing maintenance and testing, as well as inspections – but also has a strong relationship with the National Trust for Scotland. “Currently we have an electrician over at the Threave Estate near Castle Douglas, 130 miles away,” he says. “The Velux Group is another client; we do a lot of their properties now.” Also on the customer list is Kingdom Homes, a nursing and residential care operator where Mirrey has input with newbuilds.
So are all downturn fears now mostly expunged? “There is certainly no sign of a downturn,” he says. “I would say, however, that large projects from big companies have dwindled somewhat in the past three to four years.” So it’s a mixed picture. Mirrey hasn’t touched the PV market because he’s had no need to, “although we have been involved with ground heat source pumps”.
Cost control
Our last stop is Lanarkshire. We skirt Edinburgh and make for Newmains, 20 miles south-east of Glasgow. Lisa Hamilton is the spokesperson for Dalziel Services, which has 110 staff and is set to turn over £15 million for the current year. It’s a big player, spread generously across the education, healthcare, leisure, commercial and industrial sectors.
The majority of these have been aff ected by cuts in public spending. The in-built response was to diversify, including renewables. “We’re trying to be more integrated with the renewables,” says Hamilton, “especially when we’re promoting our other services.”
The firm’s dedicated renewables division has helped widen the customer base on the domestic front, as well as extend services to the existing client base, she adds.
All this has significantly boosted the sales picture. The business was turning over £4.8 million in 2010-11, some distance from its current figure. Key performance indicators are tightly woven in, so costs are monitored. “Nothing is allowed to sit and rack up costs that can’t be justified,” says Hamilton.
Taking the longer view, a big issue is training, given the skills shortfall in Scotland. “We’re training up more young people,” says Hamilton. “The majority of our workers are based in Lanarkshire and it’s important to our values that we are committed to the local area. We have 22 apprenticeships and hope to add a further 12 next year.”
