Construction industry facing grim year ahead
THE bombed out construction industry faces another grim year after PwC figures showed that more than 625 firms in the sector went out of business in the first quarter.
The latest quarterly statistics, while a slight improvement on the previous quarter, mean there have been 5,500 construction and architectural insolvencies in the two-year period since Q2 2011.
The slight reduction in insolvencies in the last quarter masks the reality that there are thousands of zombie companies, kept alive only by low interest rates and the unwillingness of key stakeholders like the banks to crystallise a bad debt by pushing th
Nick Hood of corporate health specialists Company Watch said: “There are more business failures in the construction sector than any other industry, stemming from the endemic low-profit margins and under capitalisation of most building firms, as well as the predatory behaviour of some main contractors, many of whom abuse their power by imposing suicidal pricing on their sub-contractors and indulging in unacceptably late payment practices.
“The slight reduction in insolvencies in the last quarter masks the reality that there are thousands of zombie companies, kept alive only by low interest rates and the unwillingness of key stakeholders like the banks to crystallise a bad debt by pushing them over the cliff. As output continues to spiral downwards, the prospects for the rest of 2013 and beyond look grim.”