Greg Wright: Morrisons' revival is to be celebrated as construction firms face uncertain times

IF you're a glass half full sort of person, you may well have been cheered by the latest economic data.

David Potts has returned Morrisons to its core values Photo: PA Wire/Morrisons
David Potts has returned Morrisons to its core values Photo: PA Wire/Morrisons

Morrisons, which was once described as a “supertanker heading towards an iceberg” by a former aide to Sir Ken Morrison, is now showing many of its rivals a clean pair of heels. Along with Tesco, Bradford-based Morrisons outperformed the other big supermarkets over the last quarter, as its remarkable revival continues under chief executive David Potts.

Morrisons saw sales increase by 2.4 per cent with a resulting market share of 10.4 per cent, according to Kantar Worldpanel. Morrisons’ e-commerce offering has proved particularly popular among younger, more affluent shoppers. This shows that under Mr Potts’ canny leadership, Morrisons is reaching out to a broader range of customers. It would be hard to overstate the role played by Mr Potts in Morrisons’ renaissance.

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Four years ago, Morrisons’ former admirers were in despair. The company was forced to issue a huge profit warning, compounding share price falls. Investor confidence was ebbing away. Gimmicks such as machines that sprayed vegetables with a theatrical mist left its long-standing customers feeling perplexed. They just wanted cheap, good quality veg, thank you very much.

The following year, Morrisons turned to Mr Potts, a man with four decades of experience in the retail sector, to stop the rot and return Morrisons to its core values. Mr Potts axed the majority of the management team he inherited and cut head office staff while adding shop floor staff to improve customer service. He also brought back staffed express checkouts and got rid of the complex - and much derided - computerised queue management system.

In years to come, Morrisons will be used as a case study by lecturers at management schools who want to illustrate how a single leader can transform the fortunes of an ailing giant. A corporate supertanker can change course before it is too late, provided bosses confront problems head on.

However, if the supermarket data put a spring in your step, the latest construction industry figures should fill you with dread.

The latest PMI data showed the fastest drop in construction activity since July 2016. There can be no doubt the “Beast from the East” was partly responsible for this setback because it forced workers to down tools. But the construction sector faces deeper problems which should worry all of us.

Construction firms’ wages are soaring because of skills shortages while material prices have also been rising steadily since the depreciation of sterling following the EU referendum. This is a horribly uncertain time for the British construction sector, at a time when the economy is crying out for new homes and civil engineering projects. The lack of clarity over the post-Brexit immigration system will surely lead to major projects being cancelled because bosses cannot be certain they will have enough staff. One third of trades people in London, for example, are from EU states.

Many firms have relied on EU labour due to skills shortages in the UK. Will these companies still have access to workers they need after we leave the EU? The industry is demanding answers from Theresa May.

Brian Berry, chief executive of the Federation of Master Builders, said: “The Government must take stock of today’s results and redouble its efforts to provide post-Brexit clarity to businesses.

“We need to know what we can expect from the new immigration system – we need to know what will replace free movement of people.”

March was bleak for the construction sector and the rest of the year could be just as challenging. Around 87 per cent of builders believe material prices will rise in the next six months. So the last thing they need is continued uncertainty over their labour supply. The “Beast from the East” is a paper tiger compared to the threat posed to our builders by the lack of a long term immigration policy.