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Specialist Contractors Fear 'Double Dip' Recession

The order books of specialist contractors are continuing to shrink according to the latest NSCC State of Trade Survey.

46 per cent of respondents reported a decrease in orders in the fourth quarter of 2011, another significant rise on the 37 per cent that saw the number of orders decline throughout quarter three.

With only 57 per cent of specialist contractors now working on public sector projects, down from 67 per cent last quarter, the reduction in capital expenditure is being felt across the supply chain, sparking fears of further downturn in the industry.

The cutbacks in investment and uncertainty about where future work is going to come from is leading almost a third of specialist contractors to predict further reductions in workloads over the next year and a quarter expect to downsize their businesses during this period.

The majority of specialist contractors (55 per cent) are planning less than 3 months ahead and there are already concerns about the capacity to deliver as the economy returns to growth.

78 per cent of Specialist Contractors have monies withheld against them in retentions at an average of £151,022 per respondent with 32 per cent of all retentions overdue for release and 21 per cent ultimately written off as bad debt.

A member of the CONSTRUCT Concrete Structures Group explained that “main contractors are holding on to our money for longer producing spurious claims to counteract our requests for payment”.

Those Specialist Contractors that are working in the public sector are faring better with 73 per cent managing to secure nil retention on their work and the NSCC No Retention Policy continues to provide Specialist Contractors with the support they need to resist retentions.

NSCC Chief Executive Suzannah Nichol MBE commented on the outlook for Specialist Contractors: “In order to overcome the desperate situation faced by Specialist Contractors, it is essential that the supply chain works together to increase efficiency and ensure prompt payment.”

“Those Specialist Contractors that continue to invest in their workforce and manage their cash flow will be the ones that are best placed to deliver when the economy returns to growth.”

NSCC contributes its findings to the State of Trade Survey published by the Construction Products Association, enabling the experiences of the specialist sector to be compared with the wider industry.