Civils firms struggle as materials cost rises bite

Aaron Morby 13 years ago
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Civil engineering contractors are battling with rising costs amid continued falls in tender prices.

Tender prices for both new work and repair and maintenance have been falling for over two years and as cost pressures intensify profit margins have reduced even further raising the risk of firms going to the wall, according to the first trade survey in 2011 by the Civil Engineering Contractors Association.

Across the three nations, Scottish firms reported the worst workload balances, with over half of the responses indicating that workloads fell compared with a year ago.

Overall, 24% of Welsh firms who responded, and 18% of English firms that did so, reported a decline in workload in the final quarter of 2010.

But looking forward civil engineering firms are optimistic that new orders will stat to rise over the coming 12 months.

Survey results

24 % reported a higher workload than 12 months ago

44% reported a lower workload than 12 months ago

78 % reported that costs were higher than 12 months ago

CECA director of external affairs Alasdair Reisner said: “Having now experienced a long period where the outlook for contractors has been negative, we always anticipated that the downward trend could not continue forever.

“We are heartened by the slight improvement in the balances for workload and order, but we must remember the figures remain negative: this is not the growth the industry needs.

“The positive order books are in areas of private investment in infrastructure, something that must happen if the industry is to replace lost public sector work. But we would like to see this sustained in the longer term before we start talking about recovery.

“In the short term, we remain extremely worried that tender prices continues to fall while our members’ costs are rising. This is an unhealthy situation for the industry.”

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