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M&E firms blow a fuse over prepurchased kit

THE INCREASING practice of pre-purchasing products and equipment by main contractors is prompting fears among specialist subbies over margins and the long-term impact on the industry.

The Specialist Engineering Contractors'Group said that a growing number of member firms in the mechanical and electrical sector were being told by cost-cutting main contractors to use pre-purchased equipment such as light fittings and switchboxes.

Main contractors are arranging deals with equipment suppliers to provide the goods and are passing them on to specialist subcontractors, who often make their margins on the supply of specialist kit.

The International Alliance of Mechanical Contracting Associations first raised the alarm in February after prepurchasing emerged as a major issue in Australia, Canada and the US.

But now it is appearing in the UK and some specialists are refusing to work under such terms.

Bob Harris, boss of Oxford-based electrical firm RT Harris, encountered the practice on Carillion's PFI scheme at the John Radcliffe hospital in the city, when the contractor was letting electrical packages.

He said: 'They were trying to turn us into agency-type, labour-only subcontractors.

They have removed the bits of the contract that we can make the profit on.'

Mr Harris, who walked away from the job, added: 'This could grind the industry into the dust.'

Trade associations are concerned about the impact of the practice on Eganite partnering principles.

Robert Higgs, director of the Heating and Ventilating Contractors' Association, said: 'This practice flies in the face of all the work that the industry has been doing over the benefits of integration and supply chain management.'