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Small, local build companies hit hard by delays and soaring costs

Small, local build companies have been hit hard by rampant inflation and materials price rises with uncertainty on the impact of the war in Ukraine looming large for the sector.

Small, local build companies have been hit hard by rapid inflation and materials price rises with uncertainty on the impact of the war in Ukraine looming large for the sector.

According to the latest Federation of Master Builders (FMB) State of Trade Survey, prices are hitting bottom lines with 98% of build companies having experienced material cost increases, with 83% passing these costs onto the customer. Material shortages and lack of skills still plague the sector causing job delays for the majority of FMB members. 73% of builders have delayed jobs due a lack of materials and 55% are delaying work owing to a lack of skilled labour.

The new data indicates a sharp decline in those reporting a rise in workloads for Welsh small builders, with 25% reporting an increase in Q1 2022, compared to 67% last quarter. This was accompanied by an indicative downturn in enquires, with 38% saying enquires were on the rise, down from a high of 48% last quarter. These figures suggest that the market is still healthy but does indicate a cool down.

The FMB State of Trade Survey, which is released quarterly, is the only survey of its kind to track the experience of small to medium-sized (SME) construction firms in the UK. The latest survey for Q1 2022 found:

Activity

  • Wales reported increased workload in Q1 is 25%, down sharply from 67% in Q4 2021
  • Increased enquiries are down on Q4 2021 (48%), and now reported at 38% in Q1.

Delays  

  • 73% of small builders have delayed jobs because of a lack of materials.
  • 55% of FMB members have delayed jobs due to a lack of skilled tradespeople.

Skills

  • 45% of builders are struggling to hire carpenters/joiners, up 2% on last quarter.
  • 40% of FMB members are finding it difficult to hire bricklayers, down 1% on last quarter.

Prices

  • Nearly all FMB members (98%) reported an increase in material costs in Q1 2022.
  • 95% of respondents expect material costs to increase in Q2 2022.
  • 83% of builders have put up their prices for work, up from 74% in Q4 2021.

Ifan Glyn, director of FMB Cymru, said: “Builders in Wales are still experiencing high workloads and enquiry rates, although there are faint signals that the market could be starting to cool. Whether this is a sign of things to come or a blip in an otherwise buoyant market remains to be seen. What is unchanged is the rising costs and delays to projects largely caused by lack of access to building materials and skilled labour. I would urge both public and private sector clients, to practice patience and understanding with our members during these turbulent times. I can assure you that they are just as frustrated as you with the situation.”

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