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Engineering contractors report tricky first quarter

4 Jun 18 A significant proportion of building and engineering services contractors saw their workload fall in the first quarter of 2018 but there is widespread confidence that there has been no repetition during the second quarter.

Four trade associations, including the Electrical Contractors Association (ECA) and the Building Engineering Services Association (BESA) conducted a survey of their 5,500 member firms. Of the 316 that replied, 28% said that their turnover had fallen in Q1 2018 compared to the previous quarter.

This was the highest reported percentage fall in turnover since Q1 2016, when 33% of respondents reported falling turnover.

However, 86% said they expected turnover to increase or remain the same in the second quarter.

Ongoing issues, such as poor payment practices (60% of commercial work was paid later than 30 days after completion), and one-off events, such as unusually adverse weather conditions (34% said this had impacted productivity), were blamed for contributing to the slowdown in growth.

ECA deputy director of business policy and practice Rob Driscoll said: “So far, 2018 has been characterised by continual uncertainty as we awaited the output from the Grenfell enquiry, continued in the shadow of Brexit, saw Carillion fall and powered through a prolonged period of extreme weather.

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“It was therefore no surprise that the first quarter of 2018 showed some decline, but despite higher operational costs and ongoing issues surrounding protracted payment, our sector has historically proven its resilience and has a positive outlook as demand is expected to increase during the second quarter.”

The survey also included the Scottish & Northern Ireland Plumbing Employers Federation (SNIPEF) and the Scottish Electrical Contractors (SELECT).

SNIPEF chief executive Fiona Hodgson said: “The adverse weather conditions produced additional work for some of our members with an increase in call-outs for boiler breakdowns and servicing but others faced a lack of work as a result of site closures. In addition to the continued rise in cost of materials, our members are now facing increased labour costs associated with a shortage of suitably qualified operatives.

“These factors, together with poor payment practices and a squeeze on profit margins mean that while there is hope that the volume of work is beginning to increase it is a precarious and uncertain time for many businesses.”

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