Forty-four percent of Master Builder companies have reported in the first three months of 2024 that their business is on track to make a loss or fall below expected margins, with an increase in material costs over the past quarter seeing sixty-five percent of members reporting that they have needed to increase prices, according to the latest State of Trade Survey from the Federation of Master Builders (FMB), for Q1 2024.
Gordon Nelson, Scotland Director of the FMB said: “The long-wet winter has been un-welcome, but for Scotland’s builders it has withered their workloads, resulting in a dispiriting start to the year. Whilst the relentless rain has pushed project start dates back from Stornoway to Selkirk and from Wigtown to Wick, my fear is the weather has masked more troubling problems for our local builders. Headline inflation has fallen substantially, but high construction material costs appear to be baked in. Three of the builders’ basics; insulation, roof tiles and plasterboard, remain stubbornly high priced. With consumer confidence still fragile, it is no surprise many builders, especially housebuilders, are fearing, if not expecting a loss for their business this year.
Nelson concluded: “The fact there has only been a slight decline in enquiries for future works, is a silver lining. With the late spring and summer months ahead of us, we expect workloads to pick up. Finally, having welcomed the launch of the FMB’s General Election Manifesto, ‘Growth from the Ground Up’, the recent political upheaval in Scotland means we now need to be drafting a manifesto should there be a Scottish Parliamentary election this year.”
The latest survey for Q1 2024 found:
Scottish Market Conditions
- Scotland witnessed a significant decrease in overall workloads, dropping from 7% in Q4 2023 to 14% in this quarter.
- There has been a slight decline in enquiries, with a decrease from a net change of -13% to -14% on balance, indicating a challenging picture ahead.
Market conditions
- There has been a very moderate increase in total workload and enquires, but number are still negative, reflecting the same metrics seen in 2010 to 2013 when the country was buffeted by austerity measures.
- Employment over Q1 of 2024 has remained stable and matches similar figures seen in 2010 to 2013.
- 44% of FMB members reported a decrease in enquiries.
- Workloads were up 6% on Q4 2023.
Skills
- Overall, difficulty in recruitment has slightly decreased, with the exception of general labourers who are more difficult to hire (28% struggled to hire them compared to 24% last quarter).
- 33% of members are struggling to hire carpenters.
- 28% are struggling to hire bricklayers, which has dropped considerably from 35% last quarter.
- Over a third of members report that jobs are delayed because they are struggling to hire skilled workers.
Changes in prices and costs
- 69% of members report that material costs increased in Q1 2024, up from 63% in Q4 2023.
- The impact of increased outgoings has led to 65% of members increasing the prices they charge, with 44% reporting that the business in on track to make a loss or fall below expected margins.
- Over a quarter report that they are restricting hiring new staff as a consequence of increased outgoings.
