Skilled Labour: The Key To Unlocking £725bn UK Infrastructure Investment
With Britain ready to commit £725 bn to infrastructure projects someone has to step up and be the hero to solve the crisis that is brewing. The labour market for construction is facing a serious dilemma: an ageing workforce, a shortfall of migrant skilled labour and multiple huge projects in the pipeline across the next decade.
These investments made by the government and the private sector are not just about building bridges and roads, they’re about modernising Britain’s economy, driving regional economic growth, and achieving energy transition. Skilled labour is the thread connecting every one of these ambitions and something the Chancellor needs to have top of mind when she unveils her Budget later this month
Tackling this challenge is Hercules, one of the UK’s leading providers of skilled labour and training solutions. This crucial resource will allow infrastructure that is, quite frankly, not fit for purpose to be changed, upgraded and revamped across the entirety of the nation.
The challenge
Solving a national economic priority. There is a bottleneck in the UK construction workforce with multiple factors that point to a large slice of revenue to be generated by a key player in the space. This is effectively a blocker on economic growth for the UK. The government has recognised the issue and had earmarked £600m to face this current challenge which is trying to plug the training and placement shortfall.
- Across the next five years an estimated 250,000 additional workers will be needed to meet current demand alone and this doesn’t even address further expansions on targets and new projects that may arise in this timeframe.
- Age in the UK workforce is also a factor with 10m+people over 50 still employed which is 30 per cent of the total workforce with more and more 50-64 year olds taking on more work as the year progresses. Having said that, there is a gap behind them of younger people to take their place.
- Brexit plays a factor as 46,000 EU workers have now left the UK construction sector leaving a further shortfall.
- The overlap of major projects across the next few years:
- AMP8 (water) 2025-2030
- RIIO-3 (energy) 2026-2031
- RIS-3 (highways) 2025-2030
- CP7 (network rail) 2024-2029
All of these factors will lead to a huge dilution of skilled electrical engineers, civil engineers and skilled labour workers that are vital in ensuring these projects are completed.
The opportunity
Through targeted training, inclusion, and innovation Hercules can profit massively from the opportunity that lies ahead. From high speed rail to renewable energy and water resilience. The success of the £725 bn investment plan hinges on the factor of skilled labour. The UK’s construction sector is running at capacity, facing chronic shortages across every discipline. Hercules, a leading force in workforce development, is tackling this bottleneck head on through targeted training, inclusion, and innovation.
Hercules is already benefiting, in 2023 revenue was at £82 m, increasing 24 per cent year-on-year to £102 m and company guidance suggests a steady expected 16 per cent into 2025 with £118 m. Results show Hercules transitioning from a niche labour provider to a scaled infrastructure services group. Revenue visibility is high thanks to multi-year frameworks and recurring labour supply.
“We hope potential investors identify Hercules as a solid long-term investment, operating in the UK infrastructure sector where large-scale projects will drive demand for skilled operatives for decades to come.” CEO Korkmaz.
With labour supply and recruitment services at 85 per cent of revenue you can understand how Hercules is perfectly positioned to take advantage of all upcoming major projects and with Civil Projects and contracting making up 15 per cent they cover situations like AMP7/AMP8 with utilities and highways.
Management is steering Hercules toward an asset light and technology enhanced labour supply model, which allows it to scale nationally with relatively low incremental capital. They also have decided to reduce net debt by disposal of their suction excavator business and focusing on the real drivers of the business. This refining of the business model has adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) margins, which have improved by 0.70 basis points year-on-year. Further margin gains hinge on maintaining utilisation and digital efficiency and training models as well as winning further contracts.
From skills shortage to skills strategy
The Hercules Academy is the accredited training ground for the upskilling of workers in:
- Civil engineering
- Highways
- Rail
- Utilities
Hercules uses their proprietary methods to train and change careers for areas that require qualified skilled employees. Partnerships with local authorities and working with underrepresented groups allows there to be a diverse section of the workforce trained by Hercules. This means getting the most out of new workers in the industry or those just wanting change from their current area in the construction labour market, turning social value into tangible economic growth.
The Academy has recently expanded its training initiatives into the prison system, successfully completing its first cohort at HMP Holme House in Stockton-on-Tees. Participants undertook a New Roads and Street Works course, equipping them with valuable skills. The broader Hercules group will endeavour to place these individuals on local highways projects, enabling them to apply their newly acquired competencies and offering a fresh start through sustainable employment.
Recently the academy celebrated training its 2000th person since launching in February 2024, many of whom have now been deployed into the industry, demonstrating its value.
“At Hercules, we are investing directly in people through our Academy – ensuring the workforce of tomorrow is ready today,” adds Korkmaz, CEO of Hercules.
With the UK committing to multiple decades of infrastructure renewal, Hercules is positioned at the juncture of necessity and opportunity. As the company refines its business model, prioritises training, and deepens partnerships with Tier one contractors, it stands as a bellwether for the sector’s next phase of massive growth.