With yet another builder going into administration last night in form Inland Homes the construction industry really is in trouble. The number of projects being put on hold each week is also doubling down on our need for houses.
Do other subcontractors fear that 2024 could be one of the toughest yet?
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but unfortunately residential builds are slowing down to an alarming rate. Projects currently on are slowing down massively with new projects being on the back burner. I think it will be a tough year ahead in the residential side.
Some interesting factors behind Lonsdale, for those interested, as reported at Building.co.uk, and the last line is ominous and bears out the OP's fears:
"In the statement sent out to staff, seen by Building, the company said it had been felled by a combination of the problems caused by covid-19 and Brexit and more recently the war in Ukraine “which has added further strain, with surging inflation, workforce shortages, project delays and supply chain disruptions”.
It added: “Our credit rating has suffered due to our limited credit with many suppliers, necessitating the need to make pro-forma payments for goods – a practice that is unsustainable for a business of out scale, with an annual turnover of over £250m.
“The combination of these challenges, coupled with the aggressive commercial tactics employed by certain general contractors, has regrettably led to this unfortunate situation.”
The statement said it had tried to secure a refinancing “but regrettably we were unable to obtain the necessary interest from potential investors within the construction industry”.
...In its last set of accounts for the year to September 2022, Michael J Lonsdale, whose rollcall of jobs includes 22 Bishopsgate, 8 Bishopsgate, the Paddington Cube and the Peninsula hotel, posted improved income of £191m and pre-tax profit of £2.5m, down from £2.6m the year before.
...“The initial concern to the surviving masses will be the potential further moves taken by the bonds and credit insurance markets in tightening the availability of such securities – which are relied upon by funders and developers at the top and the supply chain at levels further down. A vicious circle [is] starting to form.”
Surely they mean the referendum victory that was supposed to mean the whole of the United Kingdom of Great Britain and Northern Ireland left the whole of the European Union leaving a 300k land border to be dealt with.
Perhaps this company should wait another seven years for it to happen as voted for.
For those that don't know ISG are one of the biggest Tier 1 main contractors in the UK
I may have heard a similar name Friend Or Defoe not good news. Think we could be in for a difficult 8 months minimum.
@Friend Or Defoe can you PM the M&E company appreciate you don't want to name names.
Next week I have 2 meetings with construction firms outlining the proposals to move forward. The majority of our existing contracts are asking for 10% discount from all subbies to make the jobs viable to continue which the margins aren't in place to do so.
The government are slowly waking up to this with their delay in the 2nd staircase being implemented but more realistically the housing market needs to start moving again before many firms will continue and for that the interest rate at least needs to stabilize.
big players like Michael j Lonsdale have gone due to the single figure margins.
i generally look after our healthcare side which consists of:
98 mental health facilities
49 care homes
21 care homes.
we have noticed a downturn in spending on the mechanical assets but the one of the care home groups have just rolled out a 18.6 million revival project, to tart up the bits you see and then sell on for profit.
generally we do anything in value of 10k-500k, we dont really do anything much bigger than this, and a lot of our stuff is retrofit.
a lot of manufacturers used the energy crisis/Ukrainian war to inflate but now its settled little has seemed to have to reevaluate. The hope is sooner or later they need to sell there product and there by shorten the margins