THE head of a construction firm has warned there will be “hardly any work going on” next year and that they are “going to have to make redundancies” unless the situation improves.
Kalmac Construction managing director James Joseph said: “Especially in the development market, the loss of appetite through the interest rate rises and the cost of borrowing money has seen that completely deplete. So, where we would have at least six to eight key development projects, I’ll probably see us having two or three of those – it really does look quite bleak for next year.”
He estimated that the industry was going to “really feel a pinch” shortly after the first quarter of 2024.
“We have started looking at forecasts for next year and we are going to be doing at least 30% to 40% less work, so if we don’t find any more work it will result in having to lay people off, unfortunately.”
He said the government could help the sector by pushing through projects that were being “held up” by the planning process.
“We need to really fall back on the government to help us and try to release some of this workload at a steady pace, so that contractors can keep going.”
Jersey Construction Council chair Simon Matthews also said that further redundancies in the sector were possible.
He added: “A lot of firms are at risk and it’s not that the industry is unstable, or that firms aren’t capable – it’s just a bi-product of a lack of demand. Government needs to recognise that and help wherever it can.”
Earlier this autumn, Assistant Environment Minister Hilary Jeune rejected an appeal from developers Le Masurier, who had put forward a £120m plan to regenerate town with more than 200 homes and an “aparthotel”.
The scheme, Les Sablons, would have seen 2.5 acres of land between Broad Street and Commercial Street redeveloped. However, it was initially refused by the Planning Committee last December.
It was later recommended for approval by an independent planning inspector following an appeal, but was ultimately blocked by Deputy Jeune last month.
It is one of several major housing projects, including the Jersey Development Company’s proposal to build 139 homes at South Hill, which have failed to gain planning approval in recent months and years.
Le Masurier managing director Brian McCarthy warned that a number of large schemes were nearing completion, but that there was “no pipeline coming through”.
He also described the industry’s forecast for 2024 as “very bleak” and said that the Les Sablons development would have created 150 full-time construction jobs over four years.
“I foresee both redundancies and companies folding. Unless something fundamentally changes within our planning system or there is government intervention, construction will slow significantly.
“Commercial developments face double digit inflation, substantially increased funding costs, weak demand, and death through taxation such as planning obligation agreements, percent for art contributions, assisted housing purchasing contributions and a 20% taxation on any, if any, profits arising.”
He stressed that the situation surrounding the Les Sablons development had been “extremely frustrating and very costly”.
“Les Sablons delivers against almost all of the government’s common strategic policies, but we have been refused, despite an independent inspector recommending our scheme for approval. Le Masurier invests in other territories, such as the UK, and our investment is welcomed with open arms. So much so, in some cases, local authorities have given us grants to stimulate inward investment. 2023 has been a very challenging year for the construction industry, but I am afraid to say that it is about to get a lot worse.”
Housing Minister David Warr acknowledged there was “deep concern about where the industry is headed”.
He continued: “There is a lot of internal reflection within government as to why this is happening – we need to recognise the importance of getting major projects up and running and delivered.
“We need to be much more pragmatic.”
