B&ES president warns of the dangers of recovery
Bruce Bisset, president of B&ES (Building & Engineering Services Association) has warned mechanical contractors that traditionally more firms go to the wall during a recovery than fail in the depths of a recession. He was speaking to an international audience at the annual convention of the Mechanical Contractors’ Association in Scottsdale, Arizona, USA.
He explained that the reason for failures during a recovery lay in the fact that an upturn in construction activity tended to occur at a relatively late stage in the overall economic recovery cycle, and that the great bulk of building-engineering services work was focused on a similarly late stage in the construction process itself.
‘This means that the cost of labour and materials will already have begun to rise before the start of a building engineering services project — while client expectations will continue to hold down prices and keep margins tight,’ said Bruce Bisset.
He added that taking advantage of opportunities for growth was likely to require an investment in people, assets, equipment and business infrastructure. He warned that while turnover might increase, cash flow could become overstretched — to the extent that any unforeseen circumstance could lead to collapse.
Commenting on activity in the sector, he reported that the findings of the most recent state-of-trade survey among B&ES members indicated that business opportunities had increased in the second half of 2013. More firms acknowledged a rise in orders and enquiries compared with the previous six months, and half of respondents reported a rise in turnover. A measure of optimism regarding future prospects was also seen to have consolidated, and the number of firms recruiting apprentices and trainees grew modestly but significantly during the period.
