Construction Isle of Man has revealed a significant and worrying slowdown impacting companies across the construction sector.
The report, based on comprehensive feedback and data gathered in late 2024, warns of the broader implications for the island’s economy and sustainability goals if immediate action is not taken.
In November 2024, CIOM sought detailed input from contractors, supply-chain partners, and consultants to understand the scope of the issue better.
It said: “The findings paint a stark picture: the slowdown risks fragmenting the local construction sector to such an extent that large-scale projects may increasingly rely on off-island consultants and contractors”.
‘Perfect Storm’
Gary Proctor, Chair of CIOM, said the industry has “suffered a perfect storm” in recent years.
He said: “The foundations of which were laid before Covid and the inflationary pressures that followed, with the changes to the Government procurement procedures, a significant reduction in the public-sector capital programme and the time taken to achieve planning approvals.
“If the island wants a functioning construction industry beyond the trades servicing the domestic residential market, it is essential that lessons are learned and recommendations made in the report are actioned now, particularly if the industry is to be in position to deliver against the potential private sector and public capital projects that may come to the market.”
CIOM is urging collaboration between industry stakeholders and policymakers to address the challenges outlined in the report.
Struggling
The report highlights the precarious situation facing local contractors. Many experienced turnover declines during the pandemic and have since struggled to recover.
The abrupt cancellation of the £70 million KG Campus project in 2024 worsened conditions, resulting in diminished contractor workloads and industry-wide uncertainty.
It goes on to say: “Colas Group, has seen a steady decline in construction activities and decided to withdraw from the ‘race to the bottom’ construction tendering, and to concentrate on civils works and quarrying; it latterly withdrew from the island completely and has sold the businesses.”
Supply Chain Under Pressure
Long-standing suppliers, including HSS Plant Hire and MACS Builders Merchants, have closed, citing limited demand. Quarry outputs for sand, gravel, and cement have declined to just 81-83% of pre-pandemic levels, while imported construction materials like bulk cement have plummeted to 35% of 2019 figures. Rising costs and reduced competition have exacerbated price increases, further straining projects.
Delayed Government Projects
Stalled public sector capital projects, valued at over £80 million, have left consultants and contractors in limbo. Some projects, delayed for over five years, face spiraling costs due to inflation. This stagnation has forced businesses to downsize and seek opportunities off-island, diminishing the industry’s ability to recover.
Broader Economic Challenges
Compounding the industry’s difficulties are rising costs of living, high taxes, and regulatory hurdles. Lengthy planning processes and inconsistent policies add financial burdens, often jeopardizing project viability.
Recommendations for Recovery
The CIOM report urges strategic interventions to stabilize the sector. These include:
- Phased release of delayed projects to avoid resource shortages.
- Simplified planning processes and reduced financial burdens on projects.
- A shift to procurement policies prioritizing quality over cost.
- Support for local firms in government projects to strengthen local expertise and retain profits within the economy.
- Addressing high freight costs to reduce the Isle of Man’s 15-20% construction cost premium over the UK.
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