Contractors Need to Free Up Cash Flow As Output Slides

12th April 2018.

Construction sector output was 3 percent lower in February than a year earlier, marking the largest annual fall since March 2013, an official survey found.

According to new data from the Office for National Statistics, construction output fell by 0.8 percent in the three months to February 2018. The sector has struggled since the 2016 referendum, with housebuilding activity slowing and migrant workers returning to their country of origin in fear of how their residence status will change after Brexit. Migrant workers, in particular, make up a large proportion of the workforce in construction and manufacturing sectors, and their departure left a stubborn skills shortage in their place. As a result, productivity is spluttering, with fewer skilled workers and Brexit anxiety stifling the strength of the workforce. The recent spout of bad weather has further weakened the sector, with many construction companies struggling to complete projects when snowstorms prevented transport and heavy machinery from being operated.

It is not all bad news for the sector, however, with the Prime Minister already making deals with Brussels and the general uncertainty lifting from the business world. So it shouldn’t be too long before activity improves. Our team at the Credit Protection Association can accelerate the process, with our debt recovery services strengthening cash flow, and allow business owners to improve hiring processes as well as invest in any new technology that could enhance the work ethic of employees.

The ONS Survey further found that one of the underlying factors in the reduced output is the decrease in infrastructure spending, which plummeted by 9.4 percent.

Blane Perrotton, managing director of property consultancy Naismiths is hetsitant to blame it all on the icy weather and insists there are other factors to consider.

“Despite the modest upward revision to January’s figures, the message from the first two months of the year is clear – activity is slowing and the brief burst of momentum seen at the end of 2017 is now all but forgotten,” he said.

“The bright spots are getting fewer and further between. Housebuilders continue to shine as low-interest rates and a chronic shortage of homes keep demand burning bright.

“Though the economic backdrop remains benign – with low-interest rates, readily available finance and a resurgent Pound bringing down the cost of imported construction materials – the construction industry’s magic ingredient, confidence, remains scarce.

It is the confidence of the sector that is the problem, with anxiety for the country’s political and economic future sustaining a dark outlook. Icy roads and a shortage of skilled workers are just further hurting employees’ faith in the sector and their own professional prospects. While transition talks with Brussels are making headway, there is a long way to go before the country can claim certainty in the future. Construction companies therefore need to help themselves by improving their own cash flow and ensuring their business is in the best shape.

At the Credit Protection Association, our services not only free up cash flow for business owners but also analyse our member’s credit scores and ensure they are trading at their best. This is turn boosts confidence in the company’s prospects and their position amongst competitors.

For any construction company who is struggling with sluggish output, our debt recovery services at CPA will give you the extra cash to expand and ensure all your brickies and sparkies are well looked after.