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Fewer specialist firms planning to expand despite increased orders

Subcontractors are reining in growth plans despite a positive first half of 2010, according to a survey.

The state of trade survey by the National Specialist Contractors Council found that enquiries and orders grew in the three months to the end of June.

Forty-two per cent of specialist contractors reported a rise in enquiries, up from 36 per cent in the first quarter. Thirty-nine per cent saw an increase in orders, unchanged from the first quarter.

But many specialist firms expected the recovery to be short-lived in the face of public sector spending cuts and the fragile housing market.
Just 38 per cent of specialist contractors responding to the survey anticipated an increase in workload over the next 12 months. This was down from 53 per cent in the previous quarter.

Only 28 per cent of companies said they planned to expand over the next 12 months, down from 38 per cent in the last survey.

Public sector work is also set to contract sharply as the government reveals in the October spending review where it will focus up to £123 billion of spending cuts revealed in June’s Budget.

The commercial recovery has also faltered as a result of the Budget, with office and retail clients waiting to see how the economy reacts before committing to new buildings. Housebuilders face a difficult period as well, with social housing funding being slashed by the government and the private sector battling a predicted drop in prices.

On top of anticipated workload drops, specialist firms continue to be hit by the perennial problem of late payment from clients.

According to the survey, 24 per cent of firms were waiting more than 60 days after invoicing before they were paid for work done. This was an increase from 15 per cent in the preceding quarter.

Exacerbating cashflow problems is the late release of retentions, with 85 per cent of respondents having money withheld.

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