The economic downturn saw more than 90% of construction firms in the north and north-east of Scotland affected by bank funding shortfalls according to a new survey – with a fifth of businesses having submitted unprofitable tenders just to win work in the past 18 months.

More than 65% of companies who responded to a survey conducted by Ledingham Chalmers LLP expect to see lower-rate tenders increase as the economy recovers from one of the worst recessions in recent memory.

The findings were gathered from an audience of almost 100 construction leaders from across the regions at an annual event held in Aberdeen, hosted by leading regional solicitors Ledingham Chalmers.

December’s Scottish Construction Monitor, a survey carried out by the Scottish Building Federation, further highlighted the problems faced with nearly 80% of those responding predicting continued reductions in industry activity during 2011.

Business leaders have however voiced confidence in the sector by strongly backing the need to support apprenticeships and continued on-the-job training to ensure readiness for a return to higher levels of activity.

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There was uncertainty over whether or not potential gains could be seen in the industry as a result of the UK's membership of the EU – with a third of respondents equally agreeing, disagreeing or being non-committal about the claim.

Jennifer Young, construction partner at Ledingham Chalmers, said: "The fact that 79% of businesses rejected any suggestion that training schemes for young staff are an unnecessary luxury is clearly very positive despite a lack of available cash from the banking system and a downturn in capital investment by the public sector.

“Given the current warnings of slump and job losses continuing well into 2011, marketing the construction sector for future recruitment must be a key priority to ensure a sustainable recovery."

Kenny Anderson, managing director of building contractors Anderson Construction (Aberdeen) Limited and Trustee of the Chartered Institute of Building, added: “In these difficult times we should be training to upskill our existing staff to improve overall performance and while I accept this is easy to say, it is not always easy to create the budget.”

Abbie Massie, engineer and partner with Massie Reid, commented: “Companies reliant on overdrafts will suffer from high interest charges if they find a bank willing to lend, which unfortunately leads to negative approaches to future development and expansion plans.

“Maintaining a comfortable turnover with possible reduced costs seems to be the order of the day.”

The survey was carried out at an annual construction lunch, which has been hosted by Ledingham Chalmers over the last nine years and brings together partners, directors and managers from leading construction firms, architectural and planning practices, surveyors and banks.

(GK)