Update on the Construction Sector highlighting Subcontractors

To some of you the following may come as no surprise and to others we hope it will raise awareness of what’s going on sometimes literally under our noses.

In today’s world of mini bullet points a lot is left to the imagination on what is said and many times the complete opposite of what was intended to be read occur. Such are the vagaries of fake news

The information below is not to highlight commentary but facts as supplied in the most recent survey sponsored by Bibby Financial Services who are a top company for supplying Invoice Finance, Corporate Funding and Factoring and the facts are supplied by Gately Vinden

250 telephone interviews were carried out with 250 subcontractors, who have an average turnover of £1.95million

The covid virus has caused havoc to many industries and some companies have weathered the storm through receiving furlough payments which supplemented salary costs but don’t forget each payment made to companies will be taxed as earned income to the company, taking out Government underwritten loans, or temporarily closing operations

Construction covers a huge area of the workforce, and many major companies are totally – whilst not saying openly- reliant on subcontractors to deliver the works taken on.

Companies of all sizes have had to re-assess their operations and particularly supply lines given the present shortage of raw materials. Some are staying loyal but when something impacts so massively as Covid has, loyalty on many occasions is not rewarded and it’s unfortunately left for each to look after their own

As Bibby Financial Services say: “the true impact of Brexit-related skills and raw materials shortages and the winding down of government support measures, is yet to be realised”

But that isn’t a cop out, it’s a fair statement and here are some facts we hope will be of interest

58% are experiencing challenges with the cost and lack of availability of raw materials

44% saw a skills shortage as the greatest threat to their business

Subcontractors are waiting 23 days to be paid which is down from 30 in 2019

52% want the Government to ensure tariffs on goods to and from the EU are avoided

35% are reporting fuller order books than before the pandemic

Firms are reporting on average 20.3 weeks work in the pipeline

41% of firms are still not leveraging external funding which means they are taking the hit on increased costs

58% saw increases of raw materials and delays in receiving raw materials as a significant threat

46% were prepared to pay more to existing suppliers to get what they needed

40% have looked for new suppliers

25% have signed contracts with new suppliers

44% listed shortages of skilled labour as a threat with 36% listing labour costs as a big threat

Since 2019 there has been a changing power dynamic between Subcontractors and Contractors previously 55% had been prepared to accept Contractors terms or risk losing business, now it is 31%

45% of Subcontractors are now concerned about the financial stability of their Contractors in the light of the Carillion collapse as well as many others to date