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Confidence prevails in engineering services sector

According to findings from the sector-wide ‘Building Engineering Business Survey’, 80 percent of engineering services firms reported that turnover increased or remained steady during the final quarter of 2017.

The survey, sponsored by Scolmore and run by engineering services trade bodies BESA, ECA, SELECT and SNIPEF, received 416 responses from companies across industry in January this year.

Looking ahead to the first quarter of 2018, 85 percent of businesses expect turnover to increase or remain the same. This expectation of further growth is despite pre-Brexit uncertainty and the collapse of Carillion, which occurred one week before the survey was sent to respondents.

However, many survey respondents reported that operational costs had risen, with 65 percent facing materials price rises and 50 per cent facing labour cost increases. Underlining the continual problem of poor payment practice, more than half of firms said they continue to be paid late for both commercial and public sector work.

ECA director of business, Paul Reeve, and BESA director of legal and commercial, Rob Driscoll said: “These figures show that the engineering services sector overall is in confident mood, even against a backdrop of commercial and political uncertainty and rising operational costs. However, the true effect of Carillion’s insolvency on the supply chain is yet to come through.”

SELECT head of membership and communications, Alan Wilson, and SNIPEF chief executive, Fiona Hodgson, added: “SNIPEF and SELECT are keenly aware of the problems caused to SMEs as a result of poor payment practices and we have been lobbying the Scottish Government to make changes to ensure improved payment from public sector contracts as a starting point.

“We are also aware of some hefty increases being applied to the cost of materials, and some suppliers have indicated impending rises of as much as 15 percent, which will impact on all contractors.”

12 March 2018

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