COVID-19 Takes Added Toll on UK Market, But More European Projects Reopen
Construction industry activity in the U.K. collapsed to a 23-year low in April as sites closed due to COVID-19 ordered lockdowns, according to the latest IHS Markit/CIPS UK Construction Purchasing Managers’ Index. The index plunged from 39.3 in March to 8.2 in April.
Civil engineering recorded an index of 14.6 while commercial and residential business fell to 7.7 and 7.3, respectively. Lead times for delivery of products and materials was the longest since the survey began in 1997, with 75% of respondents reporting delays. Many also reported poor supplies of safety products.
“Although a fall in output was not a complete surprise, the scale and suddenness of the drop has knocked the wind out of building work in the U.K.,” said Duncan Brock, CIPS group director.
Meanwhile, the construction sector is losing more than $371 million worth of business a day, and its gross value added has fallen from $571.8 million per day before the March 23 national lockdown to $198.8 million a day – a 65% drop, says a report by U.K. law firm Irwin Mitchell and the Centre for Economics & Business Research.
According to the research, reported in U.K. industry publication Building, construction is in the top three of British business sectors hardest hit, behind hospitality and manufacturing.
Paris Rail Projects Resume
On a more positive note elsewhere in Europe, work on two major transportation projects in Paris is resuming for the first time since the coronavirus closed sites in March.
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On the multibillion-dollar Grand Paris Express (GPE) metro program, around half of the 150 sites in operation before closure have begun reopening following an agreement on safety work practices between the owner Société du Grand Paris, the government, and health and safety entities.
About half a dozen tunnel boring machines are being restarted on 33 km of Line 15. Two machines are being prepared for Line 16 while a TBM is under assembly for 25 km of Line 17.
GPE is a long-term program covering nearly 200 km of new lines with nearly 70 stations plus extensions to existing metro routes. When the work is done, 90% of Paris citizens will live within 2 km of a station, according to Société du Grand Paris.
In a separate program, numerous site are reopening on the Eole project to extend the E line of the RER regional railroad. The $4-billion project includes 8 km of tunnels between Haussmann St-Lazare and Nanterre, plus upgrades to another 47 km of track.
Started in 2016, the project is due for completion in 2022.
Royal BAM Sites Open
Meanwhile, about 80% of sites run by Netherlands-based Royal BAM Group in Europe are now operating—although at only 80% efficiency because of measures to counter the virus, said interim CEO Frans den Houter on May 7.
Approximately 2,000 of the group’s employees are currently furloughed under government schemes. In the U.K., companies can claim 80% of salaries up to $3,100 a month from the government. den Houter expects the number of furloughed workers soon to fall to 1,500.
While the virus “will have a significant negative impact” on the company’s financial performance, he declined to speculate on numbers.
Most Royal BAM sites in the Netherlands and Germany are able to continue operations although at reduced productivity levels. The company is facing supply and delivery difficulties there.
The company has restarted work on some sites in the U.K., where BAM has 15% of a joint venture that this April secured a $2.9-billion contract to build 80 km of the London-to-Birmingham high-speed railroad (HS2).
BAM sites in the Republic of Ireland are due to reopen for outdoor work as of May, 18, while its Belgian projects have been opening gradually since April 22.
