Can the construction industry brush off the impact of the rising costs of raw materials?

New Bibby Financial Services research into subcontractors show a sharp rise in raw material costs

The release of the Construction Products Association’s latest State of Trade survey highlighted the issue of rising costs surrounding raw material prices driving inflation, with a large majority of light (88%) and heavy (78%) manufacturers feeling the effects. With increasing cost pressures forecast to affect margins over the next 12 months, there is an ongoing debate as to whether sustained domestic demand can continue the growth that the sector has experienced in 2016.

Commenting on the findings from the Construction Products Association release today, Helen Wheeler, Managing Director of Construction Finance at Bibby Financial Services said: “There is no hiding the fact that the impact of the Brexit vote is starting to impact key sectors in the UK economy. Rising costs, in particular, are beginning to be felt by many, and subcontractors in the construction industry are certainly not immune.

“In our recent Subcontracting Growth report, a third (33%) of subcontractors indicated the cost of raw materials or labour costs as threats to their business over the next twelve months. However, overall, the majority (51%) of subcontractors do not see Brexit having a direct impact on their business.

“To stave off the potential impact of Brexit, it is vital that the construction industry continues to receive support and investment from the government and commercial developers. Almost two thirds (65%) of subcontractors generate revenue from house-building, with a third attributing more than quarter of their revenue to the area.

“The government started off the year by announcing 14 new garden villages, as part of a drive to deliver 200,000 new homes. However, it is important that these, and other house building plans, do not get held up by red tape and move forward swiftly to deliver the impetus that the industry needs.”

Posted on 11 January 2017

Contact Icon

Speak with one of our team today 0808 196 1692


Email Icon