The latest state of trade survey by the Construction Employers Federation (CEF) in Northern Ireland found that 45% said that their profit margins had worsened this year and only 9% said they had improved.
Some 55% said that inflation issues were having a serious impact causing financial concern or a critical impact leading to contractual or business risk
The survey also found that the work is out there – more than 50% of respondents said their turnover had increased by at least 10% this year – but the outlook is uncertain. The visibility of pipeline and market confidence to recruit new workers that the rest of the UK enjoys is absent in Northern Ireland.
CEF manging director Mark Spence said: “While the challenge of inflation is being felt across the economy, this survey points to two very specific factors in our sector which are of concern – tight margins and lack of pipeline.
“Although we can point to a majority of our members telling us that their turnover is growing, it is becoming increasingly difficult to complete much of this work at anything other than breakeven. That, in the short to medium term, can have very negative consequences if the pipeline of works doesn’t return to some level of buoyancy.
“With the market in Britain being a very mixed picture and the proposed huge levels of public investment in Ireland yet to truly hit the ground, it is vital that the local pipeline is healthy – something that we know couldn’t be further from the truth. For the first time in as long as anyone in the sector can remember, many government clients entered this financial year with no discretionary expenditure – leading to the cancellation of huge swathes of tendering activity. When you add to this the context of our overall public capital investment being at the same level annually as it was, in cash terms, as 2007/08 then we face a very difficult period ahead.
“Unquestionably, there are opportunities – from the city deals to the shared island funds to the prospects for major reform of the governance and financing of NI Water and the Housing Executive – but the true realisation of these can only come with a restored and fully functioning NI Executive and Assembly which can chart a forward path of public investment in which all can have confidence.
“This survey again reflects what the NI Executive and the construction sector can achieve when they work together. Over a two-year period since the introduction of the PAN 01/21 material cost assistance measure that CEF negotiated with the Department of Finance to mitigate against the difficulties of material shortages and cost increases, our members have reported an at least £38m benefit to the public sector projects they have been working on. This has ensured project and contractor viability across huge swathes of government activity and has only been achieved where our members and their clients have worked together in the spirit of openness and transparency.
“Amongst our membership, we recognise the stark challenges that we face on matters such as carbon reduction, growing the number of new build homes and building high quality education and health assets for our population – but to achieve this we need an Executive in place to maximise the opportunities that much needed investment can bring to not just our community but also the firms, their employees and supply chains who are in dire need of a confidence boost.”
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