Could the Uber-effect hit construction? Anthony Brown featured in Building Magazine
As technology pushes huge step-changes through traditional industries the well-established business mantra ‘Adapt or die’ has never been more prescient.
Uber is a classic disruptive innovation but is there any chance this ‘Uberisation’ could happen in construction, one of the UK’s most conservative sectors?
Theoretically, yes. In fact, you could argue that one of Uber’s basic tenets, that of dynamic pricing, is already alive and well in the construction sector. In Uberland the price for a journey can vary as supply and demand varies. Number of drivers = higher fares until those high fares in turn attract more drivers. Swap ‘driver’ for ‘stock brick’ and the rampant price increases witnessed when hiked demand from housebuilders caught brick makers napping a few years ago, reflects that same dynamic pricing model.
Similar fluctuations can happen with most construction commodities. Steel, concrete, timber and of course bricks, have all seen demand outstrip supply recently leading to the solution to the bulk of dynamic pricing models – throw more cash at it.
Where the construction industry is vulnerable to true Uberisation is with the supply of labour – skilled or unskilled; blue or white collar.
Uber is successful thanks to the commoditisation of an individual driver. The client has limited control over the quality of a car and the journey can be treated as a commercial purchase of a commodity – in this case 15 minutes or so of the driver’s time.
That sort of exchange could and should be available to those looking for plumbers, carpenters, bricklayers, quantity surveyors or engineers. Indeed, there are some online platforms that offer – for a yearly fee – their services as a holding pot of available construction staff. It is a model that has worked in the fast staffing turnover world of call centres and could equally apply to the building site.
Except that construction has nowhere near the staff churn of an average call centre. Construction workers will take into consideration other factors such as length of project and job security, convenience and career progression and balance that against the thorny issue of wages. The mechanics of hiring an electrician for a six-month project is very different to those of hiring a taxi driver for 15 minutes.
But these are revolutionary times. Across the pond in New York City the construction labour market has changed drastically since the lowest ebb of the downturn in 2008. Here in a city that at one point could boast an almost 100% union backed workforce is starting to move away from this expensive closed shop model.
With thousands of workers coming onto the open market contractors and developers have been emboldened to use non-union workers on their ‘open shop’ sites. With an estimated 10-15% cost savings it is easy to see why. Now estimates put the union controlled workforce at less than 50% – a remarkable figure given the former strength of the construction unions in the city.
If a market like New York City can be shaken to its foundations, there are few reasons why the UK construction industry couldn’t be similarly revolutionised.
Anthony Brown, Sales & Marketing Director from BW: Workplace Experts