UK construction companies collapse in their hundreds as costs rise
Hundreds of UK construction companies are collapsing each month amid rising costs, supply chain disruption and labour shortages.
The latest government insolvency data shows that between August and October 2021 797 construction firms went bust, up by more than a fifth compared to the previous three months, the FT first reported.
“With costs escalating and labour problems intensifying, it’s little surprise that almost a quarter of firms say turnover has decreased and more companies are going to the wall,” said Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown.
“The sector is facing a record number of vacancies with positions waiting to be filled soaring to 48,000 in the August to October period, the highest level for two decades,” Streeter continued. “Added to this volatile mix is the extra cost of Covid precautions. More than half of construction companies reported this month that their costs had increased due to the implementation of extra safety measures. It doesn’t look like the situation is easing any time soon.”
Just last week Hull-based builder PDR Construction, which employs 115 staff and a turnover of £82.73m, went into administration after making a loss of £354,418, leaving subcontractors and suppliers facing millions of pounds of unpaid bills. In October NMCN, the company formerly known as Northern Midlands Construction, fell into administration after a £24m refinancing plan fell apart amid pandemic difficulties.
Competition between firms is increasing as supply chain disruption makes it harder for construction companies to ensure they can complete jobs to schedule. Growth in the sector is slow as new companies struggle to get a foothold amid a weakened post-pandemic economy.
According to government data insolvencies across all industries were up by 88 per cent compared to the same period last year when pandemic support was in place for struggling companies. Insolvencies were up 11 per cent on pre-pandemic levels.
Read more: UK construction firms start to see the wood for the trees as shortages ease