Investment
Over the next 12 months how do you expect Please select from the following list 5 areas in which
your investment in the following to change? investment would most improve business conditions
Other capital goods
(both public and private investment)
9% 39% 49% Construction of office facilities 8%
Premises
Crime and policing 1%
35% 55% 7% Defence 2%
Client relationships
Education - apprenticeship 2%
5% 42% 50%
Education - primary 8%
Recruitment
Education - secondary 12%
49% 40% 10%
Education - university 8%
Marketing
Education - vocational 2%
13% 52% 33%
Energy distribution 4%
IT
Energy generation 7%
28% 57% 13%
Business development
Health - building/facilities improvement 7%
Health - drug R&D 0%
13% 49% 36%
R&D
Health - medical equipment 0%
11% 30% 49% 10% Health - staffing and recruitment 0%
Employee Training Housing - family 8%
22% 63% 13% Housing - low cost 8%
Telecom - implementation of faster mobile networks 1%
Don’t know Decrease Stay the same
Telecom - improved broadband access 1%
Increase Telecom - improved broadband bandwidth 2%
Sample size: 100 in each area
Transport - airports 2%
Client relationships (50%), business development (36%) Transport - high speed rail 3%
and marketing (33%) are the key areas companies are
Transport - rail 4%
currently investing resources in. This is a reflection of
companies reacting to a more competitive enviroment as Transport - roads 7%
a result of the recession and suggests that companies are Transport - seaports 0%
gearing up to take on the challenges of the public sector
cuts. Sample size: 465, from 100 participants (multiple responses were possible and so the percentage
of companies >100% - the chart above shows the percentage of companies that responed to each
area)
Each of these activities, although potentially increasing
work volumes, may have little or no overall effect given the
increased competition. Few companies have indicated that When companies were asked to select five areas in
they expect to increase investment in longer term assets which investment would most improve conditions for their
such as capital goods (3%), premises (7%), recruitment businesses, education was considered the most important
(10%) and IT (13%) which are more likely to provide the (secondary 12.3%, university 8.4%, primary 7.7%). This
capacity and skill base of the industry for the future. Such result is of interest given that only 10% of companies plan
investment is likely to be key to the construction sector to increase investment in recruitment, university cuts are
meeting the ‘low carbon’ challenge. likely to reduce the number of university places available,
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the impact of free schools and academes on secondary This suggests that it is likely that niche suppliers will remain
education, and the potential for skills to move abroad or to small in size, with some consolidation of market players
other sectors. Although some short term capacity currently that tender for smaller capital projects.
exists because of the recession, the above suggests a
worrying trend whereby companies in the UK may struggle Unfortunately, this does not leave significant prospects for
to find sufficient expertise in the medium to long run. medium-sized companies, which are likely to be integrated
into larger organisations, operated as part of a larger
Housing (general housing 8.4%, low cost 7.7%) and groups or suffer from limited growth prospects.
office facilities (8.2%) were also considered important to
companies in terms of their operations and employees’ Do you feel the recession has increased the numbers
expectations and living arrangements. This is a particular of mergers and acquisitions ?
issue in areas such as London (where 33% of companies’
Yes
head offices are located) where commercial rates are
recovering but construction turnover, margins or profits are
still depressed. Housing is also an issue for companies’ 21% No
workers, with credit constraints limiting buying activity Don’t know
(especially for first time buyers). The inelasticity of supply
is likely to add to inflationary pressure as economic growth
recovers and credit conditions ease. 51%
If you feel any important area has been missed
28%
please add it here:
• Waste from energy
• Public institutions i.e. museums, galleries, etc Sample size: 100
• Retail 51% of companies believe the recession has increased the
• Sustainable development number of mergers and acquisitions.
• Regeneration
• Sewage infrastructure If there were an increasing number of mergers and
• Water infrastructure acquisitions, would this have a negative impact on
• Education - nursery competition?
Yes
Over the next three years will your company be
23% No
active in terms of mergers and acquisitions? 28%
Don’t know
Yes
11% 15%
There is a strong possibility
It is not likely
29% No
20%
49%
Don’t know
Sample size: 100
49% of companies believe that although merger and
25% acquisitions activity has increased it will not have a
detrimental effect on the level of competition within the
Sample size: 100 industry. This supports the theory that bigger players will
15% of companies have indicated that they will be actively continue to compete internationally, whilst at the smaller
involved in mergers and acquisitions, with a further 20% end there will still be sufficient suppliers to encourage
indicating that such activity is likely. 25% held the opinion efficient pricing and innovation.
that it was not likely.
This appears to suggest that there will be some mergers
and acquisitions activity. There are several likely scenarios
such as the formation of several larger international,
multidisciplinary companies which can then compete and
benefit from economies of scale on larger capital projects.
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