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

Specialist contractors: orders and workload are falling

Two-thirds of specialist contractors reported a decline in orders during the third quarter of this year, according to new statistics.

The Q3 State of Trade survey from the National Specialist Contractors Council reveals orders are significantly down, workloads are dropping and costs are increasing.

Of the firms questioned, 64 per cent reported a decrease in orders and only 13 per cent an increase. Last year, a total of 33 per cent reported an increase and 23 per cent a decrease.

There has also been a decline in enquiries for work, with 66 per cent reporting a fall while just 9 per cent reported an increase - a year ago, 23 per cent and 21 per cent respectively.

The percentage of firms anticipating an increase in workload has fallen from 22 per cent to 16 per cent - in the third quarter of 2007, 46 per cent anticipated an increase in workload.

More respondents expect a decrease in workload - 49 per cent compared with 13 per cent a year ago.

Late payment and the under-valuation of work are seen as the most serious problems affecting specialist contractors.

Two thirds of specialist contractors received payment between 30 and 60 days, but the number of specialist contractors receiving payment after 60 days has risen by 3 percentage points to 27 per cent.

One member of the Association of Interior Specialists said: “Cash flow, bullying tactics of main contractors and competition from companies outside our sector are all issues.”

A Resin Flooring Association member said: “Main contractors are becoming worse with late payment and valuations.”

NSCC past president Graham Wren urged specialist contractors to uphold the principles of the organisation’s Fair Payment Campaign.

He said: “The achievements of the campaign are even more important in the current climate and those businesses that maintain 30-day payment terms, ensure contract conditions are met and resist the withholding of retentions will be better placed to ride out the storm and respond when the market recovers.”

Mr Wren said that, with two thirds of respondents to the survey claiming they are working at more than 75 per cent capacity, there isn’t any need to accept detrimental payment terms.

The report also reveals that 85 per cent of respondents have seen increases in their supplier prices, compared with 75 per cent in the third quarter of last year.

The percentage of respondents planning to expand their business has fallen to 7 per cent - down from 13 per cent in the second quarter of this year. In the third quarter of 2007, 50 per cent of respondents were planning expansion.

Tender prices have risen according to 37 per cent of those surveyed, up from 29 per cent a year ago.

A Federation of Piling Specialists member said: “The downturn in construction - particularly the housing market - has forced us to make redundancies over recent months.

“This will inevitably affect our ability to respond to the improvements in the market when they eventually appear.”

Analysis: Stick with fair payment practices

By Suzannah Nichol

The outlook seems gloomy for every sector, but construction is really feeling the squeeze.

Early signs of the pressures to come were felt some time ago - the rapid increase in material costs and the price reductions imposed by house builders at the beginning of the year gave the message to the specialist sector that 2008 would not be an easy ride.

But sticking to the principles of fair payment is vital.

Without payment flowing through the supply chain construction will grind to a halt, making it much harder for businesses, and the industry as a whole, to get moving again when the downturn ends.

Suzannah Nichol is the chief executive of the NSCC

To download graphs of the percentage of firms reporting increase/decrease in orders, workload and enquiries click on the resource box on the right hand side of the page.