Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

Subcontractor recovery played down

The National Specialist Contractors Council has downplayed talk of an upturn after its latest survey indicated increases in the number of orders and enquiries subcontractors were receiving.

Of the respondents to the NSCC’s state of trade survey, 39 per cent reported an increase in orders during the first three months of 2010 - a significant improvement on the 21 per cent who responded positively in the last quarter of 2009.

Meanwhile, 36 per cent of subcontractors said they had experienced an increase in enquiries from clients and main
contractors, while 33 per cent said they had decreased.

This was the first positive balance seen for enquiries since the first quarter of 2008. But NSCC chief executive Suzannah Nichol said: “One swallow doesn’t make a summer. It is certainly looking slightly more optimistic but the picture is still very mixed.

“You can look at the figures and say ‘fantastic’ but I don’t think things have really changed. I would want to see two years of continuous growth before I got excited.”

Ms Nichol said that the increase in enquiries could mean clients and main contractors were approaching more firms to price work, rather than indicating an increase in the total volume of work.

She said: “It could be that there are more jobs, but the fact that [subcontractors] are struggling to convert them says that the amount of work is staying the same.”

Ms Nichol attributed growth in Q1 2010 to clients spending before their financial years ended, as well as work being carried over after being delayed due to bad weather in December.

She added that specialists in finishing trades would only now begin to suffer from a lack of work as projects come to an end.

“The finishing trades are really starting to feel it now as well as the front-end trades, like piling,” she said.

The results of the survey show that over half of specialist contractors were operating at more than three quarters of their capacity in Q1 2010 - the percentage has risen to 52 per cent from 44 per cent in Q4 2009.

However, the percentage utilising more than 90 per cent capacity was still lower than the 28 per cent seen this time a year ago, with only a slight increase to 22 per cent for Q1 2010 from 20 per cent in Q4 2009.

The survey also showed that subcontractors were seeing their margins squeezed even further as tender prices remained static and supplier prices increased. Suppliers’ prices rose for the third successive quarter, with 62 per cent of specialist contractors reporting an increase compared with 33 per cent in September 2009.

In addition, specialist firms’ cashflows are being hammered, with 96 per cent of respondents having to wait longer than 30 days for payment in the first three months of this year.

One member of the Association of Interior Specialists said: “Payment periods are the worst they have been in our 13 years of trading.”

Despite all of this, subcontractors remained optimistic about the future.

For the third consecutive quarter, a positive balance was reported for the number of specialist contractors expecting an increase in workloads.

In Q1 2010, 39 per cent of respondents expected workloads to increase, while 21 per cent expected a decrease.