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Economic gloom continues for specialist contractors

The National Specialist Contractors Council has released the details of its latest State of Trade Survey, which shows continuing difficulties in a number of areas.

Despite 39 per cent of respondents reporting an increase in enquiries in the first quarter of 2011, less than half are operating at over 75 per cent capacity, down from 62 per cent in the previous quarter, and just one in five are working at 90 per cent capacity or more.

The number reporting an increase in supplier prices rose to 89 per cent compared with 74 per cent last quarter and 62 per cent this time last year.

Although tender prices have improved slightly, with 17 per cent reporting a rise compared with 13 per cent in the previous quarter, the increase in the cost of materials means that margins are under ever-increasing pressure, with only 11 per cent anticipating higher margins in the next quarter.

Poor payment practices are exacerbating the situation, said the NSCC, with 83 per cent of respondents having monies withheld against them in retention.

More than a third of all retention monies were overdue for release, at an average of £50,000 per respondent, 17 per cent of which is ultimately written off as bad debt.

The NSCC states that cash retention is an inefficient and outdated practice and has created its No Retention Policy to provide support to resist these clauses.

In better news, almost half of specialist contractors expect an increase in workload, leading to a renewed focus on skills as businesses look to establish a qualified workforce to deliver new projects.

A total of 38 per cent of respondents plan to recruit an apprentice in the next 12 months.