Margin squeeze tightens for trade contractors

Grant Prior 14 years ago

Trade contractors enjoyed a rise in orders and enquiries during the first quarter of this year. But specialists are playing down talk of a recovery as squeezed margins and bad debts continue to dog the sector.

The latest survey from the National Specialist Contractors Council showed that enquiries rose by 9% and orders by 18% during the first three months of this year compared to the previous quarter.

The increase in activity  has led to a small outbreak of optimism with a 17% increase in the number of specialist contractors predicting increasing workloads compared to this time last year.

But many firms are still cautious about the current market as input prices continue to rise while tender prices remain static.

Suppliers’ prices have risen for the third successive quarter with 62% of specialists reporting an increase in prices compared to 33% in September 2009. Tender prices remained static during the same period with only 3% of firms reporting an increase this quarter as margins were squeezed further.

One specialist told the Enquirer: “Materials prices are still on the up but we are getting screwed down at every turn when it comes to quoting for jobs.

“There are new enquiries coming in but the work varies hugely from sector to sector. Private housing is starting to pick-up but everyone is worried about public projects because they look like being decimated after the election.

“There’s a feeling out there that schemes are being pushed through before spending cuts so a lot of jobs being priced may never start on site.

“Those fears are also there for private work. Developers are coming up with plans, but it doesn’t mean they have the finance in place to actually go through with them.”

NSCC chief executive Suzannah Nichol said she would have to see at least two years of continuous growth in the trade survey figures before she got excited about the recovery.

Late payment is a continuing problem with 96% of specialist contractors waiting longer than 30 days for their cash.

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

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