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Bidder drops out of rail franchise race

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On track: Tender process continues as another bidder withdraws

ONE of the bidders for the Wales and Borders rail franchise has withdrawn from the process.

Abellio Rail Cymru (ARC) was originally in partnership with stricken construction and services giant Carillion.

When Carillion entered liquidation, Transport for Wales asked ARC to provide a proposal which demonstrated that ARC could still deliver the Final Tender without changing essential elements of it.

The liquidator has since been in discussion with a number of parties to sell Carillion Rail and to secure jobs, and it was possible that through this process, ARC could have secured the relevant capability.

However, ARC’s hopes to acquire the franchise were ended by the purchase of Carillion’s rail operations by a member of rival consortium bidding for the rail franchise.

Whilst this has safeguarded a number of jobs in Carillion Rail, it left ARC unable to secure the capability it would need to proceed.

As a result, on the evening of Thursday, February 22, ARC informed Transport for Wales of its intention to withdraw from the process.

Commenting on ARC’s withdrawal from the tender process, Economy Secretary Ken Skates said: “I want to express my thanks to the ARC team for their hard work during the process. It is unfortunate that, having invested significant time, effort and money into the process that they should be a further victim of the liquidation of Carillion.

“We have two strong bidders remaining in the process and remain on target to award this exciting contract in May 2018 and to transform rail services in Wales and borders from October 2018.”

Commenting, Russell George AM, Welsh Conservative Shadow Secretary for Economy and Transport, said: “It’s very concerning to see yet another major bidder pull out of the bidding at this late stage.

“We need absolute assurance from Welsh Government that the remaining two bidders are sufficiently able to deliver on the franchise’s objectives and are not also vulnerable to Carillion’s collapse.

“Any support required by the remaining bidders should be provided by Ministers so that they remain on track to awarding this contract in May.”

Of four original tenders, only two remain for the new rail franchise. Current operator Arriva Trains Wales withdrew its interest in October.

Business

Alarm over construction output fall

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Construction concern: Material prices rise with uncertainty

THE BEAST from the East, rising costs and Brexit are to blame for the sharp drop in construction output, the Federation of Master Builders (FMB) has said in response to the April 2018 construction ​o​utput figures published by the Office for National Statistics (ONS).

Commenting on the construction output figures for April 2018, Brian Berry, Chief Executive of the FMB, said: “The UK construction sector declined by 3.4% in the three months from February to April compared with the previous three months. This is the biggest fall since the latter stages of the recession in August 2012. The Beast from the East has certainly played its part as it forced many construction sites to close in March. Indeed, builders were reporting that it was too cold to lay bricks.”

Berry continued: “Alongside the cold snap, the drop in construction output can also be attributed to rising costs for construction firms large and small. While wages are continuing to rise because of the acute skills crisis in our sector, firms are also feeling the pinch thanks to increased material prices. The depreciation of sterling following the EU referendum has meant bricks and insulation in particular have become more expensive.

“We expect material prices to continue to squeeze the construction industry with recent research by the Federation of Master Builders showing that 84 per cent of builders believe that they will continue to rise in the next six months.”

Berry concluded: “In the medium to longer term, with nine months until Brexit-Day, the future is uncertain for the UK construction sector. The Government is still to confirm what the post-Brexit immigration system will look like. The construction sector is largely reliant on accessing EU workers with more than 8 per cent of construction workers coming from the EU. It is therefore imperative that the sector knows how, and to what extent, it can recruit these workers post-Brexit.”

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Research reveals Tesco’s community role

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Tesco in Wales: Providing 540K meals to those in need

TESCO has published an independent report which outlines how the retail giant works in partnership with colleagues, suppliers and community organisations to create value in Wales.

The report, part of a wider programme of activity called Value in Your Town, sets out the role Tesco plays in serving communities up and down the UK. Specifically, the report highlights Tesco’s role in supporting jobs, supporting businesses in Britain through its partnership with thousands of suppliers, and supporting charitable and community organisations across the UK.

The report estimated that within Wales during the 12 months measured, Tesco made an economic contribution of more than £937m, supported 22,654 full-time equivalent jobs and worked with approximately 200 suppliers in Wales.

The report revealed that out of every £1 spent by Tesco customers, 73p goes back to farmers and suppliers from across the UK, 11p is paid to Tesco colleagues in wages and 3p is paid to the Government in tax to pay for public services like the NHS. Every £1 of direct economic activity at Tesco was also found to generate an additional £5.46 in value to the UK economy as a whole.

For those who are keen to understand the contribution Tesco makes to the local economy, a new online tool will allow residents to do just that by entering their postcode. They’ll be given a precise breakdown of the supermarket’s contribution by individual parliamentary constituencies.

Rhodri Evans, Local Communications Manager for Tesco in Wales, said: “While Tesco is just one small part of the community in Wales, we recognise we have a responsibility to serve the community the best way we can. Tesco exists to serve shoppers, but we’re also a place where people work to support their families and we are an important partner for Welsh businesses too.

“This independent research shines a light on our role and responsibility here in Wales. It provides us with a clear picture of the opportunities and jobs we help create, the local businesses that we help support, and critically, how we play an active role, on the ground, supporting local communities.”

In the 12 months measured, Tesco provided 539,986 meals to those in need in Wales via its Community Food Connection initiative, which reduces food waste by redirecting unsold food towards community groups who can use it. The initiative has now been rolled out to Tesco Express stores to enable even more groups to access food that might otherwise have gone to waste.

And shoppers who voted in the Tesco Bags of Help scheme in stores across the Wales helped to channel more than £1.4m raised from carrier bag sales towards community projects that have benefitted their area directly. Since its launch, the scheme has evolved to make voting areas smaller, so that projects voted for are even more local to shoppers.

One group that has benefitted from the Bags of Help scheme is Green Meadow Riding for the Disabled Association. With a history spanning 40 years, it’s one of the largest Riding for the Disabled groups in Wales. The organisation relies on volunteers to deliver more than 60 riders a week with horses and ponies to provide therapy, achievement and enjoyment.

Sally Williams, who heads up the Green Meadow RDA, said: “We were delighted to receive £5000 as part of the Tesco Bags of Help scheme. The money was used to build a path across grassland which was proving difficult to cross by riders, carers and instructors.

“By providing this non-slip path, we created a safe passage for riders, who range from four to 60 years old, to get to designated riding areas whilst avoiding any accidents or getting caught in the bogged areas when weather conditions are bad. We used to be restricted by bad weather frequently, but the path has enabled us to provide riding year round.”

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Materials’ price rise squeezes SME builders

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Price up: Building material price is harming SMEs

MORE THAN half of small building firms say that rising material prices are squeezing their margins and the same percentage have had to pass these price increases onto consumers, according to the latest research by the Federation of Master Builders (FMB).

Small and medium-sized (SME) building firms were asked which materials are in shortest supply and have the longest wait times. The average results were as follows (in order of longest to shortest wait times):

  1. Bricks were in shortest supply with the longest reported wait time being more than one year;
  2. Roof tiles were second with the longest reported wait time being up to six months;
  3. Insulation was third with the longest reported wait time being up to four months;
  4. Slate was fourth with the longest reported wait time being up to six months;
  5. Windows were fifth with the longest reported wait time being more than one year;
  6. Blocks were sixth with the longest reported wait time being up to four months;
  7. Porcelain products were seventh with the longest reported wait time being more than one year;
  8. Plasterboard was eighth with the longest reported wait time being up to two months;
  9. Timber was ninth with the longest reported wait time being up to two months;
  10. Boilers were tenth, with the longest reported wait time being more than one year.

SME building firms were also asked by what percentage different materials have increased over the past 12 months. On average, the following rises were reported:

  • Insulation increased by 16%;
  • Bricks increased by 9%;
  • Timber increased by 8%;
  • Roof tiles increased by 8%;
  • Slate increased by 8%;
  • Windows increased by 7%;
  • Blocks increased by 7%;
  • Plasterboard increased by 7%;
  • Boilers increased by 7%;
  • Porcelain products increased by 6%.

The impact of these material price increases includes:

  • More than half of construction SMEs (56%) have had their margins squeezed, this has gone up from one third (32%) reporting this in July 2017;
  • Half of firms (49%) have been forced to pass material price increases onto their clients, making building projects more expensive for consumers, this has gone up from less than one quarter (22%) reporting this in July 2017;
  • A third of firms (30%) have recommended that clients use alternative materials or products to those originally specified, this has gone up from one in ten reporting this in July 2017;
  • Nearly one fifth (17%) of builders report making losses on their building projects due to material price increases, this has gone up from one in ten reporting this in July 2017.

Brian Berry, Chief Executive of the FMB, said: “Material prices have rocketed over the past year. The reason for this could include the impact of the depreciation of sterling following the EU referendum still feeding through. High demand due to buoyant international markets could also be contributing to price increases. What’s particularly worrying is that when prices have increased mid-project, almost one fifth of builders have absorbed the increase and therefore made a loss. Also, if material price increases weren’t enough of a headache for building firms, they are also experiencing material shortages with wait times ticking up across a range of materials and products. Worst case scenarios include firms waiting for more than one year for a new order of bricks.”

Berry continued: “The rise in material prices is not just a problem for the country’s construction firms – it is also a problem for home owners. Half of firms have been forced to pass these price increases onto their clients, meaning building projects are becoming more and more expensive. This problem has worsened recently with more than twice as many firms passing material prices on to their clients now compared with nine months ago. What’s more, home owners should be prepared to have to use alternative materials or products to their first choice. One third of firms have recommended that their clients should use alternative materials or products to those originally specified. Now more than ever, it’s important that builders and their clients keep the lines of communication open in order to stay within time and within budget. Specified products or materials may need to be swapped for alternatives or clients will need to accept the additional cost.”

Berry concluded: “We are calling on builders merchants to give their customers as much advance warning of forthcoming material price increases or wait times as possible so that firms can warn their customers and plan ahead. We are also advising builders to price jobs and draft contracts with these material price rises in mind. The FMB’s latest State of Trade Survey shows that almost ninety per cent of building firms are expecting further rises over the next sixth months. This makes quoting for jobs difficult but if builders flag the issue to their client from the outset, and include a note in the contract that prices may be subject to increases, they shouldn’t be left short. What we don’t want is for the number of building firms making losses on projects to increase as this could result in firms going to the wall. A large number of collapsing construction companies will have a terrible knock-on effect in the wider economy.”

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