Builders insulated from the worst of economic decline

A survey of 649 small building firms across the southern half of England (including midlands) found little evidence of an economy on the brink.

Almost 80% reported a ‘healthy pipeline of work’, 60% said they had ‘a manageable amount of work’ in the coming six months, while a further 17% said that they had ‘too much or more than usual’ in their six-month pipeline.

When asked had demand for their work changed  in comparison to other years, 70% said demand had either stayed stable or increased. A quarter of respondents report a marginal decrease in demand, with only 3% saying demand had plummeted.

The survey was conducted by the Independent Builders Merchant Group (IBMG) during December and January).

IBMG chief executive Martin Stables said: “Bombarded with negative stories about the economy one would have expected that home owners to be wary about progressing new projects. However, it appears from this research that the majority of local builders are faring well, with demand remaining stable or increasing.”

Seven out of 10 respondents said they are mostly working on refurbishment, maintenance work or rectifying/making good damage to properties.

A third of respondents specially mentioned garage and loft conversions hinting at a trend to expand living areas rather than move house.

Only 11% said they had been working on energy efficiency projects but 35% reported an increase in enquiries for this type of work, such as loft insulation, window replacement and renewable energy sources.

Stables said: “While mortgage approval rates have an almost direct effect on the domestic project work as the more movement within the housing market general filters into increased number of renovation projects. However, what we can take from these results is that people might be investing in their existing property rather than moving. Unsurprisingly, a third of our customers are reporting increased enquiries on energy efficient installations. Either way it appears that local builders are kept busy and fully employed.”

When asked about the challenges they anticipate over the coming 12 to 18 months, eight out of 10 respondents said ‘the increased cost of labour’, while seven out of 10 said ‘finding an extra pair of hands’ was challenging or very challenging. As one respondent said: “We’re always looking for more brickies and plasterers. It’s a constant battle.”

The third most challenging issue for respondents was ‘converting the volume of enquiries into actual work’.

Getting money that is owed to them does not seem to be a particular problem for builders. More than 60% of respondents said that they get timely payments from their customers.

Martin Stable said: “While rising interest rates could dampen ambitions of the large construction and building contractors, this survey suggests that local builders working on local projects appear to be insulated from the current economic crisis. Demand remains fairly constant and it appears that they have their cash flow situation in order too with the vast majority reporting timely payments.

“Contrary to many media reports and fears among workers about whether they would be unable to weather the storm this IBMG survey reveals cautious optimism among the small and medium sized builder throughout the UK.”

When asked about the coming 12 to 18 months and how they think their business will fare, more than half of the respondents said they would be ‘fine’ and expected demand to continue at ‘about the same level as previous years’; a further 10% expect to do ‘better’ than previous years; while a more cautious 22% said it was ‘hard to predict’ . Only 14% expressed any pessimism.

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