One of the early surprises following last year’s arrival of Covid-19 on UK shores was how well the construction industry adapted to the shock of lockdown.
After the initial hiatus, when we were trying to figure out how work could be allowed to continue, the industry quickly knuckled down. Productivity, per worker, even improved despite overall output being down.
And while the dystopian world of a global pandemic might be expected to cause clients to suspend projects, the work has kept coming. It was truly amazing.
Except that, long-term, things might not be going quite so well.
This month we publish the results of our annual survey of the UK’s top 100 contractors and the clear message that emerges is that it is becoming increasingly difficult for these companies to trade profitably.
Overall revenue of these 100 companies according to their latest accounts fell by about 5% - not as bad as you might expect during a plague year. But pre-tax profits dived by 82.2%.And that can’t be dismissed as a one-off. Profits were also down last year (by 38%) even though turnover had risen slightly. And it’s a trend we have been noting for at least a year in our regular Sector Focus, which looks at the financial performance of specialist contractors.
It seems that Brexit, Covid and growing shortages of materials and skills are now beginning to take their toll.