Almost a third of Britain’s small building firms have shed staff since the turn of the year, as falling workloads and rising costs have forced many SME construction companies to scale back their operations, according to new research from the Federation of Master Builders (FMB).
The FMB’s latest State of Trade Survey of member firms shows overall workloads are falling at the fastest rate since early 2012. The net balance for residential workloads was -23%, compared to -15% in the final quarter of last year, giving particular cause for alarm.
Brian Berry, Chief Executive of the FMB, said: “Last year was a tough one for our members, but there were some encouraging signs in the final quarter of 2012 that the industry may be turning a corner. These latest survey results however paint a bleak picture, and our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff.”
Workloads continue to fall, costs keep rising and credit conditions remain extremely tough. As predicted by members in the final quarter of 2012, the first three months of this year has seen 30 percent of firms shed staff. Key indications from the survey include:
- Overall SME workloads decreased at a substantially faster rate in Q1 2013 than in Q4 2012. The number of respondents reporting a fall in workloads climbed (39% vs 31%), while those indicating higher levels of workloads declined (18% vs 22%);
- The composite regional indicator which combines workload, expected workload and enquiries, showed a net balance of -1 percent in Northern Ireland. This compares to a balance of -26 in the province in the final quarter of 2012 and thereby signals a substantial improvement in the outlook for Northern Irish builders. Wales was the only devolved nation to report a positive net balance of +1. In England the figure was -16, and -20 percent in Scotland.
- Output prices, wages and salaries and material costs are all predicted to go up in the coming six months: Although in the case of material costs, the rate of increase is expected to slow marginally, as fewer firms anticipate increasing their prices (74% vs 77%). Recently agreed BATJIC pay increases of a minimum 2% across the board also take effect from June;
- SME employment continues to slide: Current employment levels are decreasing, with 30% saying they have shed staff in the first part of this year, up from 27% in the previous quarter.
Berry continued: “Our members have for years eaten into their own profit margins in a bid to maintain capacity – but that cannot continue. We urgently need to see a cut in VAT from 20 percent to 5 percent on home renovation and repair, as householders simply can’t afford to get work done to make their homes more comfortable, affordable and energy-efficient.
“Furthermore, it is clear from our figures that workloads for those firms working in the public residential sector have fallen at an alarming rate. This should be a wake-up call to government at all levels to attend to the country’s dilapidated social housing stock. Local authority borrowing caps must be raised or axed altogether to help fund the building of new energy-efficient social housing and bring existing homes up to scratch.”
