* Brexit reshaping Britain's housebuilding industry
* Builders fear supply of EU workers will be curbed
* Companies looking to 'prefab' homes made in factories
* Sections slotted together on-site with minimal labour
By Esha Vaish
March 9 The prospect of Brexit choking off the
supply of EU workers is reshaping Britain's homebuilding
industry, with big companies increasingly looking to
factory-manufacture houses in sections that can be slotted
together on-site with minimal labour.
Many of Britain's leading housebuilders, including Berkeley
, Taylor Wimpey, Persimmon and Your
Housing, told Reuters they were either planning new developments
of prefabricated homes or considering doing so.
This represents something of a turnaround in a country where
"prefabs" have borne a strong and lingering stigma dating back
to the 1940s when Winston Churchill ordered tens of thousands of
cheap, flimsy, ugly units to be built to address a shortage
housing after World War Two.
The change is being fuelled by fears over a labour shortage
in the British construction industry, which relies heavily on
European workers like carpenters, joiners and bricklayers. About
12 percent of its 2.1 million employees come from abroad, mainly
the EU, according to official figures. The trend is amplified in
London where a quarter of the 350,000 construction employees
come from other EU countries, particularly eastern Europe.
Britain leaving the European Union, with its single market
and free movement of workers, threatens the flow of this crucial
skilled labour at a time when the country faces another housing
shortage and is looking to build 1 million homes by 2020.
This is driving a resurgence in so-called offsite
construction which allows anything from bathroom pods and
chimneys to entire houses to be manufactured in factories before
being transported by trucks to the site and bolted together.
While this involves a bigger initial investment, it requires
a fraction of the labour of traditional construction, which
relies on armies of workers to build houses layer by layer from
the ground up. The imperative to avoid delays from labour
shortages can dramatically push up payroll costs.
"Fundamentally, the construction industry has been doing some
things the same way for hundreds of years. Historically, we had
the labour ... But the challenge is different now," said
Berkeley Chairman Tony Pidgley.
Berkeley is producing its first ever factory-built homes
this year. It is starting small, with 16 prefabs in southeast
London, but has another 50 in the pipeline for the capital and
plans to gradually expand the programme.
The company said it had a target of building 10-15 percent
of all its houses using modular construction in the "short to
medium term", without giving a more specific timeframe. It added
that factory work could be carried out by fewer, and relatively
unskilled, workers as most processes were automated.
Your Housing, which has a greater focus on social housing,
is taking a different approach and partnering with Chinese
companies to undertake a far bigger project.
It said it was finalising an agreement with China National
Building Material and WeLink for a 2.5 billion pound
($3.1 billion) joint venture to build six prefab factories in
Britain, one a year to 2022, with the aim of producing thousands
Your Housing executive director Stephen Haigh said Britain's
EU withdrawal would challenge traditional building by squeezing
labour, allowing factory-based construction to flourish.
Mark Farmer, author of a government-commissioned review into
the construction sector labour market late last year, said the
Brexit vote was forcing companies to look at offsite building
techniques, to reduce dependence on traditional labour.
"I'm not talking about a few thousand units, I'm talking
about investors and developers that control the development of
tens of thousands of units," Farmer, who runs the Cast real
estate and construction consultancy, told Reuters.
Britain lags other nations in the adoption of factory-based
construction, which accounted for 7 percent of UK housebuilding
by value in 2015 versus up to 15 percent in Germany and Japan,
according to data from engineering consultancy Arcadis.
Today's technology is light years ahead of the low-grade
1940s prefabs, however, and prefabrication can produce homes of
the same quality as traditional building techniques, drawing the
interest of big construction players ahead of Brexit.
Taylor Wimpey is exploring ways to "future proof" its
business and considering offsite construction options ranging
from modular house sections to prefab timber frames, said
divisional managing director John Gainham.
"Mindful of skill shortages, which is a big issue within the
industry, and the implications of Brexit potentially, we've
started to look at all the mainstream alternatives," he said.
Its rival Persimmon has for many years had a factory in
central England, part of a business called Space4, that makes
prefab timber frames for about 40 percent of all its houses.
Space4 is looking at proposals to either increase volumes at
the existing factory or build another factory elsewhere in
Britain, said Persimmon Homes Midlands chief Richard Oldroyd,
adding this was being driven by a desire to reduce reliance on
traditional labour like bricklayers, partly in light of Brexit.
It is also testing the construction of factory-based attic,
or loft, rooms as well as various finishes for houses to further
shift construction offsite, he added.
'FEEL THE FEAR'
A study carried out by the Steel Construction Institute
consultancy estimated that prefabrication could reduce
traditional on-site labour by 75 percent. Many of these workers
come from Poland.
Your Housing's Haigh estimates its factories would require a
tenth of the workforce required on a traditional project.
Berkeley says prefabs will cut on-site production time from
about 40 to 10 weeks for a typical house.
Such savings could prove important after Brexit, which
Arcadis estimates could lead to Britain missing out on 215,000
traditional construction workers coming to the country by 2020,
on top of any departures of existing workers.
The quality of prefab homes today is equal to those built
using traditional techniques. But the big upfront investment to
set up factories means they currently cost significantly more,
with builders taking the hit as they must still offer homebuyers
competitive prices. In years to come, and as the method gains
popularity, the production costs are expected to fall sharply.
Insurer Legal & General - a big investor in real
estate - spent about 55 million pounds last year to set up a
prefabs factory in northern England.
Only the big names in construction can afford offsite at the
moment because of the initial investment required, said Justin
Gates of real estate consultant Knight Frank.
"Eventually, modular businesses will get better and be
available for the small and medium-sized housebuilders to use,
but I think, at the moment, it is probably beyond their reach."
Supplier Kingspan provides a wide assortment of
construction components and services to builders of all types,
making it a barometer of shifts in industry techniques.
It said it had seen housebuilders demand more and more
offsite products since last June's Brexit vote.
Companies focused on traditional construction were now
asking for offsite supplies, while those already partly building
offsite were pushing for more, said Mark Stevenson, managing
director of Kingspan's timber solutions business.
"We're being pulled in a direction that customers want us to
go in, from more work from the building site into the factory,"
"You can almost feel the fear among the contractors and
housebuilders where they've been surviving on labour from
outside the country."
($1 = 0.8149 pounds)
(Reporting by Esha Vaish in Bengaluru; Editing by Pravin Char)