Call for improvements on engineering sites

The engineering building industry must raise productivity 10 or 20 per cent if a new generation of nuclear power stations and other energy plants is to be built on time and within budget, according to the author of an official report to be published on Monday.

Failure to improve efficiency will result in foreign companies and workers winning a bigger share of contracts to build the 10 nuclear reactors planned by 2030, along with renewable energy, biofuel and clean coal projects, said Mark Gibson, who led the review.

It found productivity on UK projects during the past 10 years lagged behind the US Gulf coast by 11 per cent and continental Europe by 5 per cent.

The report calls for on-site apprentices to be doubled to 1,000 by 2011 to meet an expected shortage of 30,000 skilled workers by 2014, with the government contributing £4.5m a year.

Lord Mandelson, business secretary, told the Financial Times the investment would be made.

“With the growing demand in this sector, we will need more young people to fill the jobs being created,” he said.

The review led by Mr Gibson, a former business department official who is now chief executive of the Whitehall and Industry Group, was ordered by Lord Mandelson during the dispute over use of foreign labour at Total’s Lindsey oil refinery in February.

It came against a background of growing strife in the industry during the past three years, with unofficial strikes over issues such as tea breaks and even “sympathy stoppages” when workers’ friends or relatives died.

Hopes of peace have risen this month with the signing of a two-year deal on pay and conditions for the 30,000 workers, after months of wildcat strikes over job security at petrochemical sites and power stations.

Mr Gibson’s review found no evidence that foreign workers were undercutting terms and conditions and said managers and unions shared responsibility for poor industrial relations.

However, it also found a wide range of shortcomings in project planning and management that were mainly responsible for a 30 per cent variation in productivity levels between the best and worst sites.

“The biggest drivers of productivity in this sector are good project engineering and good project management. The industrial relations issues didn’t help, but they are less important,” Mr Gibson said.

The report calls for the energy companies that commission the plants to establish a formal group by next March to drive improvements. It urges the Engineering Construction Industry Association, representing contractors, to promote best productivity practice. It calls for a forum of clients, contractors and unions to meet for 18 months from next January to oversee changes.

It also calls for a 1.5 per cent statutory payroll levy that UK contractors pay to fund training to be extended to non-UK contractors. The report says UK workers’ technical skills are as good as those in other countries, but expected shortages are intensified by the ageing of the workforce, with 41 per cent over 50.

Tom Hardacre, national officer of the Unite union, said it was a “positive report” that “doesn’t do anything to criticise UK labour. I see it as an opportunity.”.

Lord Mandelson said the report “shows that UK workers are not less trained or qualified and are not being undercut in their wages. But clearly there is an issue over productivity which needs to be addressed by the industry.”

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