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Specialist Contractors continue to face difficult trading conditions according to the latest NSCC State of Trade Survey.
The results for the fourth quarter of 2010 show that the market remains unstable and, with only 29% of respondents reporting an increase in enquiries and 33% an increase in orders, there is unlikely to be any sustained growth in the short term.
The longer term outlook is more positive and almost half of Specialist Contractors are anticipating an increased workload over the next 12 months compared to 36% last quarter. A member of the British Drilling Association (BDA) suggested that this was because “contracts held back pending the outcome of the Spending Review [would now be] released”.
74% of respondents to the survey reported increased supplier prices with high inflation impacting on the cost of raw materials, particularly steel. The increase in the rate of VAT, clients delaying orders and the difficulties in raising finance also affected Specialist Contractors in the last quarter. 59% are therefore predicting lower profit margins over the next quarter despite a slight improvement in tender prices.
Late payment is further squeezing cashflow with just 4% of Specialist Contractors receiving payment within 30 days. This is in spite of Government recently making 30-day payment throughout the supply a contractual requirement on all central Government contracts. 82% of respondents wait up to 60 days for payment with 14% facing payment periods of 60 days or more.
The NSCC Chief Executive, Suzannah Nichol MBE, said: “It is disappointing to see that only 4% of Specialist Contractors are being paid within 30 days in these straitened times. Prompt payment is crucial to delivering best value, and this has clearly been recognised by Government as the biggest construction client, which has made 30-day payment periods mandatory on its projects.”
NSCC contributes its findings to the State of Trade Survey published by the Construction Products Association (CPA) enabling the experiences of the specialist sector to be compared with the wider industry.
(GK)
