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The beginning of 2000 has seen a modest but distinct increase in workloads for small and medium-sized builders reports the Federation of Master Builders in its State of Trade Survey for the 1st Quarter 2000. The modest nature of the increase is underlined by there being no increase in total employment levels and an easing of delays in obtaining supplies of materials.
However, although builders are optimistic that orders will continue to increase for the second quarter there are concerns over the negative impact of the Construction Industry Scheme and the continuance of the punitive VAT rate with some building firms reporting that these impediments could drive them out of business.
Overall, the number of firms reporting an increase in workloads is 9%. The increase has been experienced in the majority of regions with Yorkshire and Trent leading the way with 24% more building firms reporting increased workloads, followed by London with 21% and the South West with 17%.
Only two regions reported a continued downturn in work. In the North West there are 10% more builders reporting less work. In South Wales, a further 9% of builders reported a downturn. However, FMB members are optimistic for the future with 34% anticipating the increase in orders to continue during the second quarter of the year.
The growth in orders continues to be mainly in the repair, maintenance and improvement (RMI) sector followed by commercial work. Orders for social housing and industrial new building and refurbishment continue to be low.
Nationally, there has been no change in the firms' level of employment compared to the last quarter of 1999 and only 7% of those surveyed reported delays in obtaining building materials. This suggests that the increase in workload is modest.
However, in line with the anticipated increase in workload for the next quarter, nearly a third of firms surveyed expect to be increasing their workforce during April to June. This will further compound the problems with recruitment with some 70% of firms reporting difficulties in obtaining skilled labour, a situation which has been worsened by the implementation of the Construction Industry Scheme. This has reduced the availability of skilled tradesmen as many have opted to work for themselves or shift into the black market, often in direct competition to those companies for whom they had previously worked.
Commenting on the findings of the State of Trade Survey, Derrick Ovington, President of the Federation of Master Builders said:
quot;We warmly welcome the improvement in workload. However, the business environment for many of our members continues to be difficult with the ill-thought Construction Industry Scheme resulting in unnecessary red tape and problems with recruiting labour. In addition, the failure of the Government to address the problem of the black market by reducing the level of VAT on domestic RMI continues to support the activities of the cowboy operatives against registered builders.quot;
quot;The negative impact of the CIS scheme and burgeoning black economy on the industry takes the edge off this modest increase in workload. Indeed for the first time, some firms surveyed reported that they fear being driven out of business due to difficulty of achieving any real profitability. An increase in workload is of small comfort if there is no profit incentive.quot;
The FMB State of Trade Survey for the 1st Quarter 2000 surveyed 360 member firms. The aggregate turnover of these firms is estimated to be close to £200 million and their total workforce is around 4,250.
Further Information
For further information, please contact:
Federation of Master Builders
Gordon Fisher House
14-15 Great James Street
Holborn
London
WC1N 3DP
Tel: 020 7242 7583
Fax: 020 7404 0296
First posted: 02 May 2000. Last modified: .
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