Small, local builders have been hit hard by rampant inflation and materials price rises with uncertainty on the impact of the war in Ukraine looming large for the sector.
According to the latest Federation of Master Builders (FMB) State of Trade Survey, prices are hitting bottom lines with 98% of builders having experienced material cost increases, with 83% passing these costs onto the customer. Material shortages and a lack of skills still plague the sector causing job delays for the majority of FMB members. 73% of builders have delayed jobs due a lack of materials and 55% are delaying work owing to a lack of skilled labour.
The new data from Scotland indicates a moderate increase in building activity in Q1 2022, with 31% reporting increased workloads. This is a very slight increase to those reporting an increased workload in Q4 2021 which stood at 29%. The survey also suggests that Scottish small builders experienced a significant slowdown of enquiries in Q1, with 27% reporting a rise, compared to 50% in Q4 2021. This puts an increase in reported enquiries in Scotland behind all other home nations, which contrasts with the last quarter of 2021, when Scotland had the top spot.
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 Q1 2022 found:
Activity
- Scotland's reported workload in Q1 is 31%, up from 29% in Q4 2021.
- Enquiries are down sharply on Q4 2021 (50%), and now reported at 27% in Q1.
Delays
- 73% of small builders have delayed jobs because of a lack of materials.
- 55% of FMB members have delayed jobs due to a lack of skilled tradespeople.
Skills
- 45% of builders are struggling to hire carpenters/joiners, up 2% on last quarter.
- 40% of FMB members are finding it difficult to hire bricklayers, down 1% on last quarter.
Prices
- Nearly all FMB members (98%) reported an increase in material costs in Q1 2022.
- 95% of respondents expect material costs to increase in Q2 2022.
- 83% of builders have put up their prices for work, up from 74% in Q4 2021.
Gordon Nelson, Director of FMB Scotland, said: “With inflation rising to 7%, which is the highest rate it has been for 30 years; the resultant depletion of consumer spending power means that many local building firms across Scotland have experienced a sharp decline in enquiries for future works. It is comforting that current workloads remain buoyant.”
Nelson continued: “However, continuing price increases across a swathe of construction products and materials, combined with sustained shortages of skilled labour, are thwarting building programmes from Brora to Biggar. These project delays reduce productivity and eat into builder’s profit margins, which have been squeezed in recent months by ongoing material price increases.”
Nelson continued: “We will be keeping a close eye on whether the next three months leads to an improvement in trading conditions for local building firms. With changes to the energy standards within the Scottish building regulations coming into effect later this year, Scottish builders have much to grapple with and our policy makers should take heed.”
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.