Confidence has been at an all-time high since the construction sector reopened in the summer of 2020, last month being the highest on record since 2014.
According to figures from IHS Markit / CIPS, production growth had increased in line with the increase in civil, domestic and commercial engineering projects. This work largely took the form of restarting delayed projects, mainly around the development of offices, leisure and hotels.
New residential construction work also experienced a major boom, as did home renovations, with spending higher in both categories.
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A sign of this growth, construction dealers such as Travis Pekins saw a 6.8% increase in sales in the first three months of the year compared to the first quarter of 2020.
However, the sector needs to be cautious as current growth projections have a bite in the tail, potentially punishing smaller trading firms more harshly than ever.
Discussing the challenges looming on the horizon for small businesses in the trades, Ben Dyer, CEO of Powered Now Field Services Manager, told City AM that âthe increased demand for construction and trade services is growing. affects small and medium businesses in the real world. companies. “
Therefore, he is “very worried” about the implications of stress on the UK supply chain, including Covid and Brexit.
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Lack of plasterboard and cement
One could be excused for forgetting, but the initial Covid lockdown in the UK and Europe has been considerably more difficult than more recent events.
In March of last year, all UK material supply lines were put on hiatus for several weeks.
While headlines were dominated by a lack of toilet paper and pulp, for the trade and construction industry it was plasterboard, cement and many other essential materials. The result was that the prices of these products increased rapidly as the availability decreased.
While it’s easy to blame the pandemic for these short-term supply constraints, there’s another fly in the ointment, Brexit.
Without passing judgment on the decision to leave the EU, Brexit has lengthened supply lines for a number of basic supplies from Europe. A large majority of the materials required for trade and construction in the UK are manufactured or processed in mainland Europe.
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UK falls to the back of the queue
As the pandemic swept across the continent, almost all major countries suffered from shortages of stocks; now, however, manufacturers are reloading supply chains that are closest to home first, with the UK falling to the back of the queue.
While this is expected to subside over time and it is encouraging to see a number of efforts to move materials production to the UK, there are no quick fixes.
This had the effect of harming SMEs in the sector even further as large companies were able to purchase these products at higher prices, to the detriment of their smaller competitors.
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âWe’re particularly critical of large companies that choose to store,â Dyer said. âThe industry is as healthy as the workforce within it, and these large companies rely on much smaller entrepreneurs to operate, who are unfairly penalized.
âIt is incredibly short-sighted of large companies to use their influence on smaller ones. Not only is this hurting the economy, but will eventually catch up with them due to their reliance on the SME sector for contract staff. We hope that this practice, like Covid, can eventually be eliminated, âhe added.
âWhile some of these issues will naturally go away as the threat of Covid and Brexit diminishes, the near-term impact on the small business market threatens to derail these good weeks of growth,â Dyer concluded.
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