Despite 39% of respondents reporting an increase in enquiries and 37% an increase in orders in the first quarter of 2011, difficulties in converting enquiries into orders means that fewer than half of specialist contractors are operating at above 75% capacity. By contrast, in the previous quarter, 62% were operating at 75% capacity.
Just one in five are working at 90% capacity or more.
The number of specialist contractors reporting an increase in supplier prices has rocketed to 89% compared with 74% last quarter and 62% this time last year. Although tender prices have improved slightly, with 17% of respondents reporting an increase compared to 13% in the previous quarter, the disproportionate rise in the cost of materials means that margins in the specialist sector are under ever increasing pressure with only 11% anticipating any increase in margins in the next quarter.
Poor payment practices are exacerbating the situation with 83% of respondents having monies withheld against them in retention. More than a third of all retention monies were overdue for release at an average of more £50,000 per company, 17% of which is ultimately written off as bad debt. NSCC believes that cash retention is an inefficient and outdated practice, and has a No Retention Policy to provide specialist contractors with the support they need to resist retentions.
NSCC chief executive Suzannah Nichol said: “The continued rise in supplier prices is putting the squeeze on specialist contractors. Whilst more respondents are saying that they expect an increase in workload, this could be due to the desperately low levels of work available at the moment with businesses anticipating that it can only get better.”
NSCC contributes its findings to the state of trade survey published by the Construction Products Association, enabling the experiences of the specialist sector to be compared with the wider industry.
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