Back to listing

10/08/2012

Pressure builds on construction firms, as output falters

 

Figures from the Office of National Statistics (ONS) reveal the total volume of construction output fell 9.5% year on year and by 3.9% when compared to the first quarter of this year.

 

Lee Manning, R3 President, comments:

“It looks like the signs of improvement in the construction sector we saw a year ago have faded away. Having had a tough start to the recession, the sector seemed to be picking up in 2010-11 but it seems that tentative recovery has faltered. While one extra day’s holiday contributed to this decline, a perennial funding problem remains for firms reliant on Government expenditure, with fewer projects out there.”

Furthermore, research by R3 found that 16% of construction businesses are only able to pay the interest on their debts but not reduce the debt itself – this equates to 37,000 businesses.

Lee Manning continues:

“We would class these businesses as ‘zombies’ - running on empty for quite some time now and any change in circumstances could push them over the edge. Without increased investment in this area, either public or private, we may see a significant rise in construction company insolvencies in the coming months.

“Unfortunately, the impact of this will not only be on the companies themselves, but on the large number of industries that supply to them. They are really feeling the pressure and they may be forced to push the pain further down the supply chain, therefore reducing the profits of those smaller businesses that supply to them.

“If some of these construction companies do start to fail, then the impact on suppliers could be very serious.”

-Ends-

 


Methodology note: BDRC Continental conducted 559 telephone interviews with small, medium and large business owners and Financial Directors between 5th-16th March 2012. Quotas are set by size, region and sector and the data weighted to the profile of UK businesses. The respondent in each case is a senior financial decision maker.

For further information please contact:

Will Black, Communications Manager
T : 020 7566 4215 m : 07917 422 485 e: will.black@r3.org.uk

Notes to editors:

  • R3 is the trade body for Insolvency Professionals, and is made up of 97% of the UK’s Insolvency Practitioners from all over the UK.
  • R3 comments on a wide variety of personal and corporate insolvency issues. Please contact the press office, or see www.r3.org.uk for further information.
  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by one of nine recognised professional bodies.
  • R3 stands for ‘Rescue, Recovery, and Renewal’ and is also known as the Association of Business Recovery Professionals.


 


R3 Press Office

Notes to editors:

  • R3 is the trade body for Insolvency Professionals and represents the UK’s Insolvency Practitioners.

  • R3 comments on a wide variety of personal and corporate insolvency issues. Contact the press office, or see www.r3.org.uk for further information.

  • R3 promotes best practice for professionals working with financially troubled individuals and businesses; all R3 members are regulated by recognised professional bodies
     
  • R3 stands for 'Rescue, Recovery, and Renewal' and is also known as the Association of Business Recovery Professionals.