Major U.K. Infrastructure Project Awarded - Many Others Stalled

Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland) - One of the U.K.'s Top 40 'priority projects' in the government's National Infrastructure Plan has been awarded to Spain's Fomento de Construcciones y Contratas, S.A. (FCC) (Madrid, Spain), but most of the others have failed to get off the ground.

FCC has been contracted to design, finance, build, maintain and operate the Mersey Gateway Bridge in Liverpool (U.K.) in a deal worth around €700 million ($920 million). The bridge, which will be built with reinforced concrete, will be 2.13 kilometres long with approaches and carry approximately 80,000 vehicles per day. Bridge construction is expected to kick-off in early 2014 and will be opened to traffic in the first half of 2017. FCC's partners in the contract bid were Bilfinger Berger AG (ETR:GBF) (Mannheim, Germany) and Macquarie Group (ASX:MQG) (Sydney, Australia) in the concession consortium, and Samsung C&T (Seoul, South Korea) and Kier Group (KIE.LN) (Bedfordshire, England), in construction. However, the award to a non-U.K. consortium may not please the U.K.'s steel industry nor construction and engineering lobbies which have repeatedly called on the government to ensure that more projects go to U.K.-based firms.

The contract is listed by the U.K.'s government in its Top 40 list of essential infrastructure projects. The global economic recession led to the collapse of many large projects, something the government believes the National Infrastructure Plan can help reinvigorate.

The National Infrastructure Plan was launched in 2011, listing almost 600 projects with the investment potential of €363 billion ($476 billion), in an effort to kick-start the stalled construction sector in the U.K. The plan, backed by major government financing and guarantees to investors, was aimed at boosting all aspects of the construction sector, including the cement and steel industries.

Last year, Chancellor George Osborne launched a package of measures designed to get many of the stalled infrastructure projects back on track, including underwriting financing for €47 billion of projects in the Plan. Another €7 billion was raised to help get 30 public-private partnership projects up and running. To qualify for funding projects had to be ready to start within 12 months.

However, latest reports show that less than a fifth of the almost 600 projects listed in the Plan have actually started and only seven - mainly road projects - have been completed.

Earlier this month, the Infrastructure Alliance -- which brings together the four leading engineering and construction bodies in the U.K. -- warned that the government must take 'bold steps' to speed up and reduce the cost of delivering infrastructure. It said that U.K. infrastructure delivery suffers from 'short-termism and uncertainty', risking the future of the sectors' 200,000 employees. It has called on the government to use the upcoming Spending Review to make good on its promises of guaranteeing long-term capital spending to build confidence among suppliers.

The government has also been called on by the steel industry to guarantee more work for UK-based companies. The British Constructional Steelwork Association (BCSA) said that the U.K. could lose out on more than €100 million in economic growth and the creation of hundreds of thousands of jobs "if UK-based manufacturing and construction businesses don't play a central role in the delivery of the Government's National Infrastructure Plan".

Sarah McCann Bartlett, BCSA Director General commented: "Last year, the U.K.'s last remaining train factory bid for a £1.4bn contract to build 1200 carriages for Thameslink. It lost out on cost to overseas competition. This has had a devastating effect, with Bombardier going on to cut 1,000 jobs. Concerns still remain over the job security of the business' remaining 1,600 UK employees. This is just one example; we need a fundamental shift in procurement guidelines to consider best value, not cost alone".

The U.K. government is expected to reveal how it intends to speed up the implementation of the National Infrastructure Plan later this week.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.