Turnover is predicted to grow through the rest of 2021 but ongoing materials and labour shortages are likely to worsen, according to the latest sector-wide Building Engineering Business Survey.
The survey, which includes data from industry trade bodies ECA, BESA, SELECT and SNIPEF, shows that specialist contractors are particularly concerned about the lack of skilled staff able to meet growing demand for the sector’s services.
There are shortages of skilled labour in all specialist sectors, and this is pushing up labour costs. As a result, 26 per cent of survey respondents said they would hire fewer agency workers and subcontractors in Q3 compared with Q2. Just under a quarter (23 per cent) said they would hire fewer apprentices despite the urgent need to increase the flow of new skilled people into the industry.
Nearly two-thirds (61 per cent) said they expect the continuing shortages of materials and equipment to deteriorate as the year goes on (Q3 versus Q2). Individual respondents highlighted the lack, and rising prices, of cables, cable trays and containment, as well as growing lead times and delays in deliveries.
However, more than eight in 10 (85 per cent) of respondents expect their turnover to remain the same or increase in Q3 2021, compared with Q2. Almost nine in 10 (87 per cent) expect turnover to stay the same or increase between now and the end of 2021.
Rob Driscoll, the ECA’s director of legal and business, said: “While businesses, particularly SMEs, should be commended for their tenacity and resilience in the face of a challenging commercial environment, the clock is ticking for labour and materials.
“A backlog of jobs may appear good on paper, but if the ongoing shortages are not resolved soon, in practical terms, this will mean a further squeeze on costs and margins for contractors who are at risk of tendering for today and buying negative cash-flow problems for tomorrow.”
BESA’s director of legal and commercial Debbie Petford also called for an increased focus on training for competence and compliance to fix some of the industry’s longer-term problems. She said: “While shortages of materials are clearly an immediate problem and will persist through the rest of this year, we must also find a way of addressing these endless cycles of skills shortages that make it very hard for businesses to plan with confidence.
“As the journey towards net zero gathers pace, it will be increasingly important that businesses invest in upskilling existing staff and encouraging new blood to come into the sector so we can build a resilient workforce ready for the challenges ahead.”
Alan Wilson, managing director of SELECT, said: “The ongoing uncertainty around materials is still a concern for the whole industry, and contractors are to be applauded for their resilience and forward planning in dealing with an issue that is clearly impacting their day-to-day business.
“Contractors are also to be applauded for supporting apprenticeships in Scotland, with record numbers recruited this year. As this survey shows, there are very real concerns about the availability of competent people, so it’s essential that we train the talent of tomorrow now and equip them with the skills to thrive in the electric future that awaits us all.”
Fiona Hodgson, chief executive of SNIPEF, added: “There is a very real concern in the industry for the future and its ability to meet demand, as this survey has shown.
“We continue to hear from members that there are simply not enough skilled installers to meet current demand. With fewer apprentices being recruited during the pandemic this has exacerbated the issue and we are deeply concerned this will impact on government targets and future projects.”
“Government low-carbon ambitions should mean a plentiful future work supply for plumbers and heating engineers, so we encourage the industry to future-proof themselves by focusing on recruitment of apprentices and upskilling their existing workforces.”