The belief that a construction recovery is evident only in Dublin while rural areas are in desperate need of investment is an article of faith in the regions, none more so than Donegal. Brian Foley travelled to the North West to speak with CIF members there.
“We’re one of only three counties without a motorway or rail link,” says Barry McMenamin describing the lack of infrastructure investment in the county.
It comes as no surprise, therefore, to learn that when the A5 road upgrade from Monaghan to Derry was postponed due to the economic downturn a few years back, it was a hammer blow to the region.
“It creates a difficulty in attracting investment into the county,” says Barry, whose father established Joseph McMenamin & Sons 70 years ago.
He describes the current situation in the county as “interesting times”.
“The country is experiencing massive housing shortages with rising rents as a result, yet here in Donegal we have plenty of houses at a reasonable cost,” he says.
The county needs support from the IDA and Enterprise Ireland, says Barry. “In fairness, they’re trying but the all the FDI focus appears to be on Dublin.”
The long-term CIF member says that although his company is not as busy as he would like, he remains optimistic about the future.
“Rural Ireland and particularly Donegal always lag urban areas when it comes to an upturn,” he says. “We would hope by the middles of 2016 there would be an uplift.”
Echoing other CIF members in the county Barry says procurement procedures are weighted towards national and international companies.
“Turnover requirements and ‘bundling’ makes it difficult for regional contractors,” he explains. “From a regional perspective we need manageable packages because we don’t have the scale to compete at that level.”
Barry worries that if construction comes to be dominated by international firms, training new staff – a responsibility local companies traditionally undertook – will fall away.
“The next 18 moths will be a time of huge change,” he says. “The CIF work on CIRI will have an effect. It will help police the construction industry.
He describes CIRI as “absolutely necessary”.
“The implementation of BCAR will also improve the construction process and image.”
Like many he is opposed to the exemption for ‘one-off’ houses. “We’re creating a divide in construction, BCAR houses and non-BCAR houses.
“People don’t want the exemption, they’ll be nervous about selling on.”
Talking to CIF members in the county, the sense is that for many contractors work comprises school projects (and the Summer works). For McMenamin & Sons the fishing port in Killybegs provided a €5m project (manufacturing facility for Seaquest).
Barry admits turnover stands at €6.5m compared to €25m during the boom.
He says next year will prove a dangerous time for contractors as bidding for work on tight margins will continue along with an increase in costs.
“We’re bidding for work two years down the line based on today’s prices,” he says.
Having said that, stability will eventually return to the market, says Barry.
Just down the road from the McMenamin base in Stranorlar is MBC Building Contractors in Ballybofey, which is run by Dermot Gildea, the current Chairman of the CIF Dongeal Branch.
“Water metering and summer works for schools,” is how Dermot, who works with his brother John, describes the current situation in the county.
Echoing Barry McMenamin, Dermot says government work is “crucial” while local architects securing work is important as they will employ local contractors.
It is only recently Dermot and John had to travel for work. “We’ve been doing this for over 30 years and it’s only now that we’ve started staying overnight,” he says.
Tender prices are very competitive – there are usually 10 to 12 tenders for each project – while turnover requirements are a huge drawback for local contractors.
Having said that, Dermot says he appreciates his role as Chairman of the Donegal Branch. “My father only missed two meetings in all the years he was in the business,” he says.
He mentions outgoing Chairman Oliver Duffy as someone who served members well in the region.
Dermot’s wish list for the county is that government and local authority keep investing. “They need to stay away from ‘bundling’,” he adds.
Turning tide
For Dessie Dorrian from Dorrian Construction the recession saw his company’s turnover drop 90%.
“We’ve trebled turnover in the past year,” he says, “but I think that because so many contractors have gone out of business. The volume hasn’t increased, it’s just there’s less contractors around.”
Dorrian Construction are working on “mainly industrial” projects. Dessie mentions bundling as restricting competition. “If you only have five contractors in a bundle process that can’t be good for competition.”
The upturn in car sales has seen a demand for refurbishment of garages: “They’re filling the gap now that schools have trailed off.”
Infrastructure development is vital to the future success of Donegal, says Dessie. He mentions the N56 and A5 as roads that need upgrading, the benefits for outweighing the initial costs.
“They’ve been talking about a link road (in Letterkenny) for 20 years,” he says.
“We would say to FDIs thinking of coming to Ireland ‘look at Donegal’. The cost of living is lower and salaries will be lower also.”
After so many negatives it’s worth mentioning the positives. Letterkenny Institute of Technology has a well-regarded Civil Engineering & Construction faculty, which is turning out the construction professionals of the future.
“And don’t forget Donegal is a grand cheap place to live,” says Dessie. “Donegal is a lifestyle choice!”
Our image shows Lurgybrack National School in Letterkenny, a Dorrian Construction project