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Civils sector still mired in recession

Civils firms continued to suffer in the first quarter of 2010, according to the latest survey by the Civil Engineering Contractors Association.

Workloads and order books fell across all but the rail sector, while there was widespread pessimism over future workloads, with no hope that a recovery was in sight.

The survey, which covers 350 firms responsible for 80 per cent of the UK civils market, showed that 67 per cent had workloads lower in Q1 2010 than during the same period last year.

Only 8 per cent of those questioned said their workloads had risen over the past year.

The sector’s largest companies are now feeling the pain of the recession - four in five firms employing more than 600 staff said workloads had fallen.

Earlier in the downturn, it was smaller firms reporting the largest falls in work, as the larger companies survived on projects won in better times.

With the coalition government already scaling back transport budgets for 2010, the mood is bleak among contractors in the sector.

When asked about the future, 53 per cent of firms said they expected workloads to deteriorate - a significant increase from the last survey.

Poor workload expectations are in line with order books, which according to the survey have been contracting on an annual basis since October 2008.

More than half of the firms questioned said they were planning to employ fewer people in the future than they do at present.

This trend was the same across firms of all sizes, with the largest companies the most pessimistic.

The only bright spot was the rail sector, where order books have been increasing for the past few months.

CECA national director Rosemary Beales said: “The UK civil engineering sector has entered its second consecutive year of declining orders.

“The industry will be aware that the Government is running the rule over all areas of public sector spending, with a real danger that cuts will mean the situation gets worse before it gets better.”

Ms Beales added: “The UK faces huge challenges in the coming decade, particularly in keeping the country moving and keeping the lights on.

“The Government must balance the need to reduce the deficit with the need to invest in infrastructure, which will play a key role in the delivery of a sustainable, low-carbon economic recovery.”

Work in the water and sewerage sector was particularly scarce in the first three months of this year, as work ended on previous investment programmes.

There was little hope for repair and maintenance work to fill the civils void.

A third of respondents expected R&M orders to decline over the next 12 months, while half expected no change.