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Danger in a wholly local market focus

AGENDA - COMMENT

NOT LONG ago the national contractors were busily scaling down their regional operations to create new business units focused on the needs of nationally spread clients. In straightforward terms, the margins were too low to justify the regional overheads.

Now a little more than a decade on everybody seems to be racing back into regional contracting with great gusto. This should not be a surprise to anybody - national contractors are simply following the money.

The public sector is now the industry's biggest spender, which means local authorities, housing associations and regional development bodies are firmly back in the driving seat as clients.

On top of that central Government and European Union funding is increasingly being steered towards regional regeneration.

So contractors can be forgiven for being tempted back into the local fold.

But the haste with which directors are staking out their territories carries more risk than is apparent.

Local spending is notoriously unpredictable, as anybody in the civils side waiting for regional transpor t pr ior ities to be endorsed will testify.

Despite the ministerial spin about investment, there are signs the Government is being tempted to view regional decision taking as a means to slow spending.

At the moment regional contracting is a healthy market for all - including the welter of smaller truly local private firms - but it could fast look like an overcrowded market if there is a spending hiatus.

Then who survives?