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A key challenge facing the construction industry in 2003 is how it can embrace, influence and appease trade unions.

Despite the traditional low-intensity war between contractors and organised labour with the construction industry, there have been very few instances of significant industrial action in the past 10 years. The punch-up on the Jubilee Line Extension between the electricians and Drake & Scull, the M&E contractor, was the exception that proves the rule.

However, industrial unrest could become a possibility this year, particularly after recent changes in the leadership of construction unions. Sir Ken Jackson, the Blairite leader of electrical union AEEU, has been replaced by Derek Simpson, a left-winger who officially took over on 1 January.

The election was accompanied by allegations that Jackson was guilty of ballot fixing. Jackson denied this, but Simpson has suggested that the accusations cast doubt on the agreements reached during Jackson's tenure – including national pay agreements. The general shortage of electricians would give the union a strong bargaining position in any renegotiations, and if the union did win better terms for its members, there would be obvious implications for contractors who have signed up to, and budgeted for, fixed-term pay agreements.

Industrial unrest could be triggered by the anti-PFI campaign being undertaken by two public sector unions, the GMB and Unison. This has already forced Tony Blair to require that PFI hospital workers be employed under NHS contracts.

One way employers could get on the right side of unions is by providing a site office for a permanent union representative. George Brumwell, general secretary of UCATT, says this would help labour relations on larger sties, and he is currently negotiating for an on-site representative at Heathrow's Terminal 5. This site has already been in the spotlight after civil engineering firms demanded that national agreements be waived in favour of project-specific pay rates.

Brumwell is emerging as a political moderate, particularly with regard to the PFI, which he notes is preferable to the P45. In exchange for his acceptance of private finance, Brumwell will be looking for contractors' good faith in industrial relations.