Unsurprisingly, I have recently had a large number of clients and candidates asking about what we are seeing in the Engineering market. I thought that I would share what I have been observing;
It’s a contradictory market at the moment, in the sense that client confidence is dipping despite strong workloads persisting across the market. The Mood of the Boardroom article published in yesterday’s Herald highlights it well (link below for those that missed it), where it states that business confidence is wobbly despite the economy showing its highest level of quarterly growth over the past two years, with GDP growing 1pc over the June quarter.
This is exactly what I am seeing in the Engineering market currently. Despite what are still historically high levels of activity, confidence is dipping.
So why the change of mood when there is still so much work to chase?
While confidence can be based on objective measures (I heard recently that one of my clients, a leading Consultancy, operated at a loss over the past financial year for the first time in their long history, which wouldn’t do wonders for their confidence), I believe it is often subjective and is a feel thing. Therefore, in my opinion the negativity in the media currently is playing a large role in the reduced confidence. The constant barrage of negative reporting around the economy is bound to erode even the most positive of dispositions.
Secondly, there are policies from the coalition government that are contributing, particularly regarding immigration and foreign investment. In our sector we rely heavily on foreign investment, so the feeling that the government is anti-foreign money has meant that some investors/clients have lost confidence, withdrawing or reducing their money while they wait for the dust to settle.
Confidence also has a snow ball effect; that is once it starts dropping it can be hard to turn around. As an example, I was speaking to a client this morning and they commented that while the work is still there, clients are now waiting until resource consent is granted to proceed with projects, as opposed to ploughing on as they have in the past. This appears to be risk management from the clients as a result of their own confidence dropping. This means that the consultants are having some down time while the client waits for consent to be obtained, making managing resources and work flow trickier. As a result of the client’s confidence decreasing, the consultant is now questioning the markets stability; cause and effect and all that.
Finally, as with everything, confidence is relative which is what I want to leave this post on; is confidence dropping because of the market? Or is it merely because the market has been at such high levels over the past 5 years?
In my opinion, confidence should still be high because all the signs indicate that while the economy (and as a result Construction and Engineering market) is no longer the Rockstar it was once proclaimed to be, it should still be pulling a pretty big crowd.
Grada currently has a huge number of mandates across the market from clients with the confidence to hire. If you would like to discuss anything I have mentioned in detail don’t hesitate to get in touch, or equally if you feel the confidence is waning within your organisation, get in touch to find out what businesses are going from strength to strength.
James Stevenson | Grada Recruitment