The turnover of companies in membership of the Building & Engineering Services Association (B&ES) showed a less rapid drop in the second half of 2012 than in the first half - but worsening order and enquiry levels indicate that business performance is likely to deteriorate in the coming year.
This is the principal message delivered by the second B&ES independent State of Trade survey, covering the six months from July to December 2012, which was carried out across the Association’s membership in January of this year.
Overall, member confidence was found to have reduced, with 10% fewer respondents than six months ago expecting the commercial environment to improve in the short term.
Fifty one percent of respondents reported a further fall in tender prices, 29% a continuing decline in direct employment and the same percentage a reduction in the use of agency labour. Additional pressure from the rising costs of materials was cited by 62% of respondents, and the continuing proliferation of pre-qualification regimes by 34%.
Geographically, London, Yorkshire and the North East experienced the steepest decline – as did firms operating in the domestic, service and facilities sectors – while members with a turnover of over £5 million appear to have been less adversely affected than their smaller competitors.
The engagement of apprentices and trainees was also seen to have fallen during the period of the research – although a small majority of respondents expected to make a greater investment in vocational training over the next six months, albeit from a low base.
Surprisingly, only 63% of respondents confirmed that they had had some involvement in the installation of renewable technologies during the period – down from 70% six months ago. Air-source and air-to-air heat pumps continue to be the most popular technologies, followed by solar thermal.
Meanwhile, B&ES members believe that the major factors negatively affecting business growth continue to lie in late payment, ever-tighter profit margins and insolvency further up the contractual chain.
The B&ES State of Trade survey was the second to be conducted online by independent research organisation Lychgate Projects. Overall, just over 200 B&ES members took part in the research. The Association has commissioned a further State of Trade survey – covering the first half of 2013 – to be carried out in July, and intends to repeat the exercise six-monthly thereafter.