Reasons to be fearful…

THE rising cost of materials and supplies is a growing threat to the construction industry.
This was the outcome of the latest Scottish Construction Monitor, which found that confidence in the industry had fallen during the final three months of 2013.
The Monitor is a quarterly survey of around 600 industry employers that make up the membership of the Scottish Building Federation.
The survey asks members to rate confidence about their prospects over the next 12 months. The previous quarter’s survey found industry confidence had risen by 31 points compared to June 2013 to stand at PLUS 18, the first time a positive result had been recorded since the quarterly survey series began in 2008. The latest survey shows confidence remains in positive territory but has fallen back to PLUS 9.
Construction employers were also asked about their experience of supply and material costs over the past five years and what impact these are having on their business.
On average, companies indicated they spend 32% of annual turnover on materials and supplies. Almost two in three said rising supply costs have outstripped any increase in client fees over the past five years and have eroded profit margins. In general, 46% of respondents said they were ‘somewhat concerned’ about the impact of rising supply costs on their business and a further 34% described themselves as ‘extremely concerned’.
SBF Managing Director Vaughan Hart said, “I think the slippage in confidence underlines the relative fragility of recovery in the industry and across the economy more generally.
“That said, I’m encouraged we’re now seeing a second consecutive quarter when the overall industry confidence rating is positive.”