‘A third of North West construction firms face collapse’
NEARLY a third of construction companies in the North West are at risk of failure in the next 12 months, according to research by R3, the insolvency trade body.
This figure compares to 25% of businesses at risk in the region overall, reflecting the ongoing recession in the construction market.
R3’s figures show that over 6,600 construction and civil engineering companies registered in the North West are at risk of collapse. The lack of development finance and cuts in public spending are cited as key problems for the industry.
A recent Markit/CIPS Construction Purchasing Managers’ Index which showed that although construction output increased slightly in October, new orders fell for a fifth consecutive month and firms cut jobs at the fastest rate since August 2011.
Jeremy Oddie, North West regional chair of R3 and head of recoveries at accountants Mitchell Charlesworth, said: “The construction sector has been one of the worst affected in the downturn. The ‘crane count’ in towns in cities clearly indicates the fall in activity and there is still no relief in sight.
“Developers are finding it extremely difficult to raise funds and can often only do so on the back of an anchor tenant. At the same time, while there are a handful of ongoing projects, including the Metrolink extension and the refurbishment of Manchester and Trafford town halls, many public sector projects have been put on hold.
“There is some comfort though for smaller builders as the ‘skip count’ indicates that home owners are choosing to upgrade their properties rather than sell up and move in the current market. Overall times are tough for construction companies and many will find it difficult to survive the winter.”
R3’s data came from Bureau Van Dijk’s ‘Fame’ database. ‘At risk of failure’ is defined as a company that has a QuiScore – a measure of the liklihood of company failure in the next 12 months – in the ‘caution’ or ‘high risk’ rating band.
