The Civil Engineering Contractors Association has set out a ten point plan to avoid more than 8,000 redundancies in the UK’s small and medium sized civil engineering firms.
Figures released by the CECA showed that across the UK many of the firms that provide the expertise to build and maintain the country’s critical infrastructure are facing a bleak Christmas, with fears that 17 per cent of SME employees – an estimated 8,400 workers - could lose their jobs as a result of the current market downturn.
The figures are based on the results of a survey of small and medium-sized CECA members carried out in October that looked at the impact of the current economic downturn.
While such SME firms will be expected to play a crucial role in the on-the-ground delivery of major infrastructure projects such as the £16 billion Crossrail project and the Government’s plans for a new wave of nuclear power stations, the survey shows that many of the firms will face a struggle for survival over the coming months. Key concerns highlighted include falling workloads, difficulty securing and maintaining bank funding, increasing delays on payments by clients and steep cost inflation.
CECA director Rosemary Beales said: “There is little sign that the overall market for civil engineering contractors is improving as we head into 2009, and our research shows that for SMEs especially, the situation is getting steadily worse. If the SME sector is allowed to contract, through redundancies and businesses failing, then the construction industry will lose capacity and the skills and resources lost will have to be replaced – at great expense – when demand for infrastructure development returns.”
“Steady investment now could maintain civil engineering SMEs through difficult times and offset a far greater outlay when the country needs to call on their resources in the future,” she added. In the banking sector, the survey found that across the UK, 46 per cent of SME civil engineering contractors had seen a rise in the cost of their banking arrangements as a result of the economic downturn, while 28 per cent of firms have found it more difficult to secure new funding from banks.
In housing, 35 per cent of SME civil engineering contractors said they relied upon the housing sector for more than 20 per cent of their annual turnover.
These firms anticipate losing around 46 per cent of this housing-associated work as a result of the slump in the sector. For public sector work, 37 per cent of contractors have seen a reduction in the availability of public sector works in the last 12 months across the UK, while in overall total workloads, 66 per cent of civil engineering contractors have seen a reduction in total workloads, with 31 per cent claiming to have less than two months worth of confirmed orders.
Twelve months ago this figure was just 9.6 per cent. The average period taken for UK civil engineering contractors to be paid by clients increased by more than eight days in the past year, with 30 per cent of firms seeing payment periods increase by more than 20 days.
The ten-point plan:
* Accelerate expenditure on planned public sector infrastructure works;
* Ensure prompt payment of amounts due to small and medium sized firms;
* Demand fair treatment of small and medium-sized contractors by banks;
* Encourage the use of local firms on work under EU procurement regulation threshold;
* Reinstate rate relief on empty commercial property;
* Prevent the use of on-demand bonds and remove retentions from future contracts;
* Cut planning, environmental and heritage consent bureaucracy;
* Steps to reinvigorate housing market;
* Streamline procurement of construction work, selecting on quality, rather than solely on price;
* Protect the next generation of skills