Builders are feeling the pinch, seeing their profits tumble as the pressures in the economy mount. Small, local builders are facing an uncertain few months ahead with growing concerns about insolvencies, as they tackle increasing inflation, the knock-on effects of the war in Ukraine and a customer base looking to tighten its belts.
In the most recent State of Trade Survey from the Federation of Master Builders (FMB), a staggering 49% of small builders have had a negative impact on their profit margins in the last quarter. For many small, local tradespeople, these margins are often fairly tight even in the good times. The FMB warns that without clear political and economic direction, during the summer under the caretaker government in Westminster, the industry will face an uncertain future.
15% of builders in Northern Ireland reported an increased workload in Q2 2022. However, this is down on the 31% seeing a positive workload in Q1 2022. The new figures also indicate a steep decline in the number of enquiries over Q2 with -31% of builders who responded saying they are receiving increased interest from customers for new work. This is down 69% on last quarter when 38% reported an increase in enquiries. This suggests the market, over the next few months, could be severely cooling off as homeowners look to save money.
The FMB State of Trade Survey, which is released quarterly, is the only survey of its kind to track the experience of small to medium-sized (SME) construction firms in the UK. The latest survey for Q2 2022 found:
Impact on net profits
- 49% of small, local builders have seen a negative impact on profit margins owing to the current economic climate.
Northern Irish market activity
- 15% are reporting a rise in workload compared to last quarter.
- -31 are reporting higher enquiries. Meaning more builders are reporting fewer or no change to enquiries compared to the last quarter.
Market conditions
- 71% of small builders have delayed jobs because of a lack of materials.
- 61% of FMB members have delayed jobs due to a lack of skilled tradespeople.
- Significantly fewer FMB members report a rise in enquiries, across all areas of work, compared to the last quarter.
- Housebuilding enquiries are down significantly, tracking in negative territory for the first time since the pandemic.
Skills
- 42% of FMB members are finding it difficult to hire bricklayers, up 2% on last quarter.
- 42% of builders are struggling to hire carpenters/joiners, down 3% on last quarter.
Prices
- 98% reported an increase in material costs in Q2 2022.
- 95% of respondents expect material costs to increase in Q3 2022.
- 81% of builders have put up their prices for work.
Gavin McGuire, Director of FMB Northern Ireland, said “Whilst levels of activity have remained quite high it’s a real concern that enquiries for potential new work have dropped considerably. If that pipeline is slowing down, it suggests that either it’s levelling out from what has been a busy period for the industry or we are seeing a wider lack of confidence in affordability to complete projects.”
McGuire continued “Feedback from FMB members suggests that uncertainty over rising costs within wider society means some clients are reluctant to commit to planned projects. This is a real concern and presents another unforeseen challenge our members will try to overcome.”
Notes to editors
The Federation of Master Builders (FMB) is the largest trade association in the UK construction industry representing thousands of firms in England, Scotland, Wales and Northern Ireland. Established in 1941 to protect the interests of small and medium-sized (SME) construction firms, the FMB is independent and non-profit making, lobbying for members’ interests at both the national and local level.
The FMB is a source of knowledge, professional advice and support for its members, providing a range of modern and relevant business building services to help them succeed. The FMB is committed to raising quality in the construction industry and offers a free Find a Builder service to consumers.
