Member Article

Two thirds of Yorkshire construction firms optimistic despite skills shortage

Two thirds of construction firms in Yorkshire are more optimistic about their future prospects than they were 12 months ago, according to a new report.

The survey of over 600 companies by law firm Irwin Mitchell did highlight ‘growing concerns’ amongst senior decision makers about the cost of labour, with 61% of expecting wages to rise during the rest of 2014.

According to Irwin Mitchell, this is being caused partly by a skills shortage in the sector. The law firm also highlights the growing issue faced by main contractors who are seeing tender return prices increasing due to subcontractor inflation following a long period of flat prices.

The survey also revealed some significant differences in optimism in different parts of the UK with the lowest level of confidence recorded in Wales at 62%. The figure for Northern Ireland stood at 75% whilst in Scotland the figure stood at 64%.

Within England, levels of business confidence were highest in the East Midlands (84.6%) and lowest in the North West (64.7%).

Julie Morrissy, construction partner at Irwin Mitchell in Sheffield, said: “On the whole, these results reflect an improving construction sector. Not only are we seeing the impact of strong demand for house building, the sector is being buoyed by mid to high end residential developments, offices, commercial space and logistics.

“The key now is to ensure that this positivity is sustained into the longer term. The opportunities exist but there are threats and it is vital that companies deal with them effectively.

“The availability of materials is a concern, but with the majority of firms expecting wages to increase during the rest of the year, it’s clear that the lack of skilled workers could also hamper future growth.”

Steven Bate, a Leeds-based partner at Irwin Mitchell and a specialist in construction litigation, added: “It is vital that UK businesses take full advantage of this market optimism whilst ensuring that they are fully protected.

“There is a tendency for businesses to get on with the work immediately after a contract has been awarded, but it is important to ensure that they are protected via their contract.

“As work opportunities increase for construction companies, we expect that businesses will see extra pressure on their cash flow due to a lag in getting paid under most standard forms and bespoke construction contracts, whilst still needing to pay one’s supply chain.

“This can however be protected via robust contract drafting and negotiation and debt recovery services.”

This was posted in Bdaily's Members' News section by Clare Burnett .