President’s Column: June 2022

At the time of writing this column, most steelwork contractors seem to be very busy, but most are also equally as nervous about the future when the high demand for buildings due to the un-locking of COVID-19 restrictions reduces. I don’t think we’ve seen a steel price increase for a number of weeks, so that’s a relief. It is clear though that large increases in material prices are now starting to bite into contracts won before the increases and for contracts that unfortunately have been delayed or shelved entirely. We’ve all tried to pass on costs to our clients and we’ve all had various levels of success in doing so. Even if you’ve manged to pass them on, final accounts will generally be more troublesome than usual. The time elapsed between finishing on site and receiving the final payment is always a little galling, especially when you consider how main contractors routinely quote sub-contractor payment terms to their clients and the wider industry. Tier 2 steelwork contractors have had to put up with a lot of pressure on their cashflow recently, “Reverse VAT” certainly didn’t help cashflow, where on the other hand it positively helped the main contractors’ cashflow position.

Even when you get the job over the line, with the new norm there is now more pressure on the credit insurance industry to support their customers. Their credit limits are mostly based on turnovers that are out of date. Many suppliers are struggling to raise their credit limits to insure most of their debt. I can’t see this correcting itself for the best part of a year, when new terms are agreed. Many companies have increased turnover rapidly in a short time, which puts additional pressure on cashflow. All this at a time when banks are now realising that quite a few people might not be paying back that CBILS loan they took out, so banks are nervous.

Retaining staff in a market where there are too few employees to fill the number of vacancies is difficult. Employees have high expectations, but care needs to be taken to prewarn the less experienced – at the end of the boom, there is always a fall. I know a few industries where salaries were increasing at an alarming rate, but these salaries are now stabilising. Inflation is high in the UK at the moment and there is pressure on employers to pay large pay increases in line with inflation. Quite simply the country can’t afford to increase salaries in line with these expectations.

All things being equal I will soon be coming to the end of my second year as President of the BCSA and hope to be voted in for a third year. We all know what’s wrong with our industry and more importantly the pressures and risk put on to Tier 2 and 3 sub-contractors and suppliers. For Tier 2 steelwork contractors, the majority of these problems are caused by an over capacity of fabricated steel in the industry. Main contractors have plenty of choice and steelwork contractors never have enough work at the right time. Will things change, probably not when there are too many hungry steelwork contractors out there.

Mark Denham
BCSA President