The latest Construction News Barometer revealed that 81.4% of contractors have had a supplier become insolvent on at least one project over the last 12 months, an increase from 76% from the last survey.
The Construction News Barometer publishes various data regarding the Construction Industry, and this quarterly survey highlights the number of high profile administrations that have affected this sector in 2016. One of the most recent and notable administrations was Manchester based Hewden Stuart Ltd which warned they had been struggling to find new financial backers just weeks before the administration on 22nd November 2016. The result was the loss of over 340 jobs, with 133 jobs transferred as rival firm Ashtead bought three of Hewden’s divisions.
Contractors responding to the Q3 2016 survey said they were concerned about client confidence in the years ahead with one respondent remarking “London and the South-east commercial and residential market is hardening. Major developers [such as] Land Securities and Great Portland Estates are calling the market in 2019 [and] consultants are trying to work as much as they can before the [expected] downturn.”
Just over half of contractors said they had seen projects paused or scrapped completely following the EU referendum in June 2016. Most of these were wary of attributing this solely to the result of the vote, but the fall in the value of the pound had had a clear effect among the firms questioned. Almost 50% of contractors said that the fall in the value of the pound had forced them to increase the price of jobs with increases in the price of materials in particular causing issues for both contractors and clients. Lipton Rogers co-founder Peter Rogers told Construction News earlier that it was becoming increasing difficult for clients to develop a business case in the current climate. He said “Everything is price-driven and if you look at the London market at the moment, you have still got lots of different prices and everything is going up. Developers are getting a double-whammy because contractors are not cutting their margins and [that is then] mixed with inflation from the stuff that comes from overseas.” As result, many contractors are turning to UK suppliers, rather than purchasing from overseas.
Trade Credit Insurance protects contractors against financial losses associated with unpaid invoices and applications arising from the insolvency or default of a supplier. Acumen Credit Insurance have many brokers who are construction specialists and are able to arrange bespoke policies to fit a companies individual needs. If you would like more information on how Acumen can help your business, please contact us or read more about Construction Credit Insurance here.