"Green shoots" for construction industry despite 30% downturn

Thursday 09 January 2025

The construction industry could see "green shoots" in a few months with several major projects due to start, an industry leader has said in the wake of the closure of another local building firm.

K-Land Construction – which had worked on projects ranging from luxury homes to the Biarritz Hotel – recently announced it had ceased trading.

Lee Madden, Vice-President of Jersey Chamber of Commerce, said the news of the closure was "awful", particularly considering the time of year, and that the construction industry was "in the region of 30% down" from two years ago.

Pictured: Chamber of Commerce Vice-President Lee Madden is optimistic about the long-term future of the construction industry. (Jon Guegan)

The last few years have been "difficult" for the construction industry, Mr Madden acknowledged.

The announcement of K-Land's closure came less than a year after Kalmac, MAC Energy and Eden Interiors – all part of the MAC Group – ceased trading.

In autumn, Mitchell Building Contractors closed, leading to the loss of more than 30 jobs. Building firms Camerons and JP Mauger both also collapsed in 2023.

But Mr Madden stressed that the Chamber of Commerce remained positive about the industry's future.

He said that there are some "green shoots" out there that point towards improvements in 2025.

Major infrastructure projects later in the year will help, added Mr Madden, noting that "the sign of a booming economy is when there are cranes on the horizon".

He explained: "We need to get through the next few months and we hope that the Government will realise some infrastructure projects in Q2 and Q3.

"We have got an amazing sector. There are good long-term prospects there."

Pictured: An impression of the new hospital project.

The tender process for the new hospital launched in October, with potential suppliers asked to express their interest in taking on the project.

Meanwhile, a redevelopment of South Hill was approved last year, with 130 flats now in the pipeline to be built on the former site of the planning offices.

And a major redevelopment of the Harbour was given the green light and is due to completely transform the site.

However, Mr Madden explained that there was no company based in Jersey that could take on the hospital project on its own.

Instead, collaboration between local and UK or European firms could be the way forward, he said.

The construction industry has been hit not only by inflation, but by the high cost of materials, difficulty in getting qualified staff – particularly when they have to be brought to the island – as well as the minimum wage for apprentices being put on a par with the minimum wage for fully-fledged employees.

Several companies have said they had to stop taking on apprentices last year because they would have to pay them at least £13 per hour, rather than following the previous scale, which saw wages increase with training.

Among these was Brady & Gallagher, which couldn't hire its usual four apprentices in air conditioning, electrical and plumbing, as well as Gordon Electrical Services, which normally takes on two or three apprentices.

Mr Madden stressed that paying apprentices the living wage was "the right thing to do", but that it was still a contributing factor to the industry's difficulties.