SME builders have revealed that consumer price inflation and the rising cost of living has had only “a very limited impact” on their current and future workload, according to an extensive survey by the Independent Builders Merchant Group.
Despite the ‘cost of living’ squeeze on domestic spending, small and medium sized builders are not feeling the impact – yet at least. Almost 80% of mostly local building businesses reported a ‘healthy pipeline of work’ despite well documented pressures on household budgets. 60% said they had ‘a manageable amount of work’ in the coming six months while a further 17% said that they had ‘too much or more than usual’ in their six-month pipeline.
When drilling down into the type, value and size of projects, IBMG reported that a similarly positive picture seems to emerge. The vast majority (87%) of SME builders said the building projects they are working are the same size or bigger than previous years. Two thirds of all respondents said the size of jobs or projects they were working on or planned to work on are the same size as this time last year, and 22% stated that projects are bigger than in 2022. Only 12% revealed that the building jobs they were taking are smaller than 12 months ago.
Furthermore, when asked had the level of demand for their work changed in comparison to other years, a whopping 70% said demand had either stayed stable or increased. This breaks down to 18% said demand had ‘increased a lot’ with a further 20% saying it had ‘increased a little’. One third of respondents said they had ‘not noticed any change in demand’ for their work.
A quarter of respondents report a marginal decrease in demand, with only 3% saying demand had plummeted.
IBMG CEO Martin Stables (pictured) said: “Bombarded with negative stories about the economy one would have expected that home owners to be wary about progressing new projects, however, it appears from this research that the majority of local builders are faring well, with demand remaining stable or increasing.”
The type of work that small and medium sized builders are engaged in also seems to have stayed the same with, in order of importance, respondents reporting working on refurbishment & maintenance, followed by extensions, then loft & garage conversions, with new builds and internal reconfigurations coming in at fourth place.
A third specifically mentioned garage and loft conversions, hinting at a trend to expanding living areas rather than move. Whilst only 11% said they worked on delivering energy efficiency projects at the moment, more than a third (35%) reported an increase in enquiries for this type of work – for example, demand for loft insulation, window replacement and enquires about renewable energy sources.
When asked about the core challenges they anticipate over the coming 12 to 18 months, 8 out 10 respondents noted ‘the increased cost of labour’, closely followed with 7 out of 10 saying that ‘scarcity of labour or difficulty in finding an ‘extra pair of hands’’ was challenging or very challenging.
The third most challenging issue was said to be ‘converting the volume of enquiries into actual work’ however, the vast majority have no problem with cash flow as in excess of 60% said they get timely payments from their customers.
Martin commented: “While rising interest rates could dampen ambitions of the large construction and building contractors, this survey suggests that local builders working on local projects appear to be insulated from the current economic crisis. Demand remains fairly constant and it appears that they have their cash flow situation in order too with the vast majority reporting timely payments.
“Contrary to many media reports and fears among workers about whether they would be unable to weather the storm, this IBMG survey reveals cautious optimism among the small and medium sized builder throughout the UK.”
The IBMG survey was carried outin Jan & February 2023, drawing 649 responses from SME building businesses (with 20 or less employees) based throughout the south of England – from the Midlands down to London, the South East, South West – reflecting the merchant group’s network and customer base.
