Big Builders Moan As Subbie Rates Rise
BIG builders are expressing concerns over the ability of the supply chain to cope with further growth following reports that pay rates for sub-contractors have increased at the steepest rate for more than 17 years.
Respondents to the Markit/CIPS Construction Purchasing Managers’ Index survey for May report ‘shortages of stock and supply-chain bottlenecks’.
Richard Threlfall, KPMG UK head of infrastructure, building and construction, claims main contractors are now ‘taking a thrashing’, with the supply chain ‘holding the whip’.
He explains that demand is outstripping supply resulting in rising costs for main contractors.
‘Availability of sub-contractors has fallen at the sharpest pace since August 1997, leading to increased supplier lead times and higher rates. It will be a cause for real concern amongst main contractors that rates charged by sub-contractors have increased at the steepest pace since the survey began 17 years ago.
‘The construction supply chain took most of the pain during the recession, with many businesses going bust and output falling 20% below its peak. But over the last year demand has picked up sharply and main contractors are having to compete for the reduced capacity in the market.
‘Main contractors’ difficulties are compounded by the shortage of skilled labour, and rapidly rising demand for construction materials which must soon translate into a further upswing in materials inflation.’
David Noble, chief executive at the Chartered Institute of Purchasing & Supply, says: ‘With supply constraints still persisting, there are concerns about how this prolonged period of growth can be sustained through 2014.’
Housebuilding continues to be the strongest performing part of the industry, while civil engineering output increases at a faster rate.
The industry saw a rise in staffing levels for the 12th successive month, meaning staffing levels increasing at the strongest rate since mid-2006 to early-2008.
This article has been reproduced from the Contract Flooring Journal. You can find them at www.contractflooringjournal.co.uk.