Almost a third of Britain’s small builders have cut staff so far this year, according to new research from the Federation of Master Builders.
The FMB‘s latest State of Trade Survey of members found that falling workloads and rising costs have forced many SME construction companies to scale back their operations.
Overall workloads are falling at the fastest rate since early 2012. The net balance for residential workloads was -23%, compared to -15% in the final quarter of last year, giving particular cause for alarm.
FMB chief executive Brian Berry said: “Last year was a tough one for our members, but there were some encouraging signs in the final quarter of 2012 that the industry may be turning a corner. These latest survey results however paint a bleak picture, and our members are telling us that they are faced with the unenviable choice of putting up their prices or laying off staff.”
Workloads continue to fall, costs keep rising and credit conditions remain extremely tough. As predicted by members in the final quarter of 2012, the first three months of this year has seen 30% of firms shed staff.
Overall workloads decreased at a substantially faster rate in Q1 2013 than in Q4 2012. The number of respondents reporting a fall in workloads climbed (39% vs 31%), while those indicating higher levels of workloads declined (18% vs 22%).
Things have improved for builders in Northern Ireland, however, with the composite regional indicator which combines workload, expected workload and enquiries, showing a net balance of -1%, compared with a balance of -26 in the final quarter of 2012.
Wales was the only devolved nation to report a positive net balance of +1. In England the figure was -16, and it was -20% in Scotland.
Berry continued: “Our members have for years eaten into their own profit margins in a bid to maintain capacity – but that cannot continue. We urgently need to see a cut in VAT from 20% to 5% on home renovation and repair, as householders simply can’t afford to get work done to make their homes more comfortable, affordable and energy-efficient.”