This is among the conclusions to be drawn from the first quarterly workload trends survey of Civil Engineering Contractors Association (CECA) members for 2011.
Firms continue to report negative workload balances and the costs of energy, fuel and materials continue to rise rapidly, putting contractors under huge pressure.
Despite an improvement in expectations regarding new orders for the coming 12 months, employment continued to decline in the year to January 2011 and an increasing number of CECA members are struggling with rising costs.
CECA members report that tender prices for both new work and repair and maintenance have been falling for more than two years. Profit margins have reduced as cost pressures intensify, further increasing the burden on profitability and the risk of insolvency. Falling tender prices occurred consistently across all size of companies and categories of work.
Across the three nations, Scottish firms reported the worst workload balances, with more than half of the responses indicating that workloads fell compared with a year ago. Overall, 24% of Welsh firms who responded, and 18% of English firms, reported a decline in workload in the final quarter of 2010.
The results of the survey, carried out in January 2011 and drawing responses from 100 members, show that:
- 24% of firms reported a higher workload than 12 months ago
- 44% reported a lower workload than 12 months ago
- 78% reported that costs were higher than 12 months ago.
CECA director of external affairs Alasdair Reisner said: “Having now experienced a long period where the outlook for contractors has been negative, we always anticipated that the downward trend could not continue forever. We are heartened by the slight improvement in the balances for workload and orders, but we must remember the figures remain negative: this is not the growth the industry needs.
“The positive order books are in areas of private investment in infrastructure, something that must happen if the industry is to replace lost public sector work. But we would like to see this sustained in the longer term before we start talking about recovery.
“In the short term, we remain extremely worried that tender prices continue to fall while our members’ costs are rising. This is an unhealthy situation for the industry.”
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