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Materials’ price rise squeezes SME builders



Price up: Building material price is harming SMEs

MORE THAN half of small building firms say that rising material prices are squeezing their margins and the same percentage have had to pass these price increases onto consumers, according to the latest research by the Federation of Master Builders (FMB).

Small and medium-sized (SME) building firms were asked which materials are in shortest supply and have the longest wait times. The average results were as follows (in order of longest to shortest wait times):

  1. Bricks were in shortest supply with the longest reported wait time being more than one year;
  2. Roof tiles were second with the longest reported wait time being up to six months;
  3. Insulation was third with the longest reported wait time being up to four months;
  4. Slate was fourth with the longest reported wait time being up to six months;
  5. Windows were fifth with the longest reported wait time being more than one year;
  6. Blocks were sixth with the longest reported wait time being up to four months;
  7. Porcelain products were seventh with the longest reported wait time being more than one year;
  8. Plasterboard was eighth with the longest reported wait time being up to two months;
  9. Timber was ninth with the longest reported wait time being up to two months;
  10. Boilers were tenth, with the longest reported wait time being more than one year.

SME building firms were also asked by what percentage different materials have increased over the past 12 months. On average, the following rises were reported:

  • Insulation increased by 16%;
  • Bricks increased by 9%;
  • Timber increased by 8%;
  • Roof tiles increased by 8%;
  • Slate increased by 8%;
  • Windows increased by 7%;
  • Blocks increased by 7%;
  • Plasterboard increased by 7%;
  • Boilers increased by 7%;
  • Porcelain products increased by 6%.

The impact of these material price increases includes:

  • More than half of construction SMEs (56%) have had their margins squeezed, this has gone up from one third (32%) reporting this in July 2017;
  • Half of firms (49%) have been forced to pass material price increases onto their clients, making building projects more expensive for consumers, this has gone up from less than one quarter (22%) reporting this in July 2017;
  • A third of firms (30%) have recommended that clients use alternative materials or products to those originally specified, this has gone up from one in ten reporting this in July 2017;
  • Nearly one fifth (17%) of builders report making losses on their building projects due to material price increases, this has gone up from one in ten reporting this in July 2017.

Brian Berry, Chief Executive of the FMB, said: “Material prices have rocketed over the past year. The reason for this could include the impact of the depreciation of sterling following the EU referendum still feeding through. High demand due to buoyant international markets could also be contributing to price increases. What’s particularly worrying is that when prices have increased mid-project, almost one fifth of builders have absorbed the increase and therefore made a loss. Also, if material price increases weren’t enough of a headache for building firms, they are also experiencing material shortages with wait times ticking up across a range of materials and products. Worst case scenarios include firms waiting for more than one year for a new order of bricks.”

Berry continued: “The rise in material prices is not just a problem for the country’s construction firms – it is also a problem for home owners. Half of firms have been forced to pass these price increases onto their clients, meaning building projects are becoming more and more expensive. This problem has worsened recently with more than twice as many firms passing material prices on to their clients now compared with nine months ago. What’s more, home owners should be prepared to have to use alternative materials or products to their first choice. One third of firms have recommended that their clients should use alternative materials or products to those originally specified. Now more than ever, it’s important that builders and their clients keep the lines of communication open in order to stay within time and within budget. Specified products or materials may need to be swapped for alternatives or clients will need to accept the additional cost.”

Berry concluded: “We are calling on builders merchants to give their customers as much advance warning of forthcoming material price increases or wait times as possible so that firms can warn their customers and plan ahead. We are also advising builders to price jobs and draft contracts with these material price rises in mind. The FMB’s latest State of Trade Survey shows that almost ninety per cent of building firms are expecting further rises over the next sixth months. This makes quoting for jobs difficult but if builders flag the issue to their client from the outset, and include a note in the contract that prices may be subject to increases, they shouldn’t be left short. What we don’t want is for the number of building firms making losses on projects to increase as this could result in firms going to the wall. A large number of collapsing construction companies will have a terrible knock-on effect in the wider economy.”


Superfast roll out by councils is superslow



Damaging businesses: Nine Welsh councils have no broadband plan

AN INVESTIGATION by broadband comparison website, BroadbandChoices, which analysed almost four hundred UK council websites and Ofcom performance statistics, has revealed that many councils have missed their own targets and deadlines for improving broadband connectivity in their areas.

And only one of Wales’ 22 councils – Newport – has hit the target; while nine have no plan at all.

The research reveals that many councils fall drastically short of targets set to provide superfast connectivity. Just 12 out of the 391 UK Councils analysed have reached 95% levels of superfast broadband penetration or higher, the UKs target. It also revealed that only 7 councils in the UK have met the targets for broadband speeds they set themselves.

The latest analysis from BroadbandChoices highlights how much work must still be done by Councils to provide sufficient connectivity to all homes and businesses in the UK, regardless of location.

With broadband speeds affecting small businesses, rural communities and those who work from home, internet speeds have a significant impact on productivity and can cost businesses money, time and even customers or clients and are costing businesses thousands in lost productivity.

The average percentage of premises with superfast broadband speeds has been revealed to be just 58% based on Ofcom’s report – nearly 40% lower than the 95% UK-wide target. The research also reveals that almost a quarter (24%) of councils don’t have a publicly available strategy when it comes to broadband.

After reviewing 391 council plans for broadband outlined on each council’s website and comparing them with actual broadband performance levels as compiled by Ofcom2 the research also revealed that the percentage of premises with access to superfast broadband ranges from just 11% in some jurisdictions, to 98% in others. This dramatic discrepancy in connectivity means some council areas have 87% fewer homes able to access superfast broadband yet no clear plans in place to improve performance.

The research exposes how the majority of councils in the UK under-estimated how long it would take to make superfast broadband available to premises within their borough. Sixty-seven councils were found to have failed to meet the targets they set themselves within the timeframes they identified.

The findings suggest that many councils in the UK have failed to make superfast broadband a priority. Surprisingly, 122 councils have information about plans to extend broadband penetration on their websites but exact details regarding reach and performance are inadequate. Broadband Choices research found vague claims in an unquantifiable format or without a specific target date for completing the work. Meanwhile, many other councils failed to even reference broadband on their websites.

The volume of ongoing council plans demonstrates that many councils are still working towards achieving widespread connectivity in their areas, and that more work still needs to be done to reach the UK Government target of 95% coverage for superfast broadband, despite some reports that it has already been achieved.

Vix Leyton, home comms expert at Broadband Choices said: “This study demonstrates that while many UK councils have active plans in place to improve connectivity for their residents, very few have succeeded in actually meeting their targets. Meanwhile, areas with the most need have councils who are failing to recognise good internet connectivity as a strategic priority.

“Whilst our research gives a broad stroke picture of the UK by comparing council intention to reported performance, a lot of consumers are still in the dark when it comes to the actual service and speed they will personally receive until after they have signed up for a deal. Broadband Choices has been lobbying for some time to inform consumer purchasing, using things like the postcode checker tool, to ensure that in the face of different reports about performance they will get a clear and honest picture of the position their home or business is in.

“Access to technology is a staple requirement and reliance on high-quality connectivity will only increase. That’s why we’re helping to educate consumers so they are better aware of the broadband available in their area, and what plans their local Council has in place to keep up with technology. Councils should have their plans and target deadlines clearly outlined on their website for constituents to see, and if targets haven’t been met this needs to be addressed and reviewed, and residents are entitled to know why.”

“The lack of superfast broadband has a combined impact on productivity and communication, which is a real concern, translating into a loss for small businesses, and communities. Councils need to do more to improve connectivity to protect the productivity of the UK workforce.”

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General Manager of Valero will drive £1.3bn Swansea Bay deal



A LEADING figure with links to Pembrokeshire will play a key role in driving forward the £1.3bn Swansea Bay City Deal.

Edward Tomp, Vice President and General Manager of Valero UK in Pembroke, has been chosen as preferred candidate to become chair of the Swansea Bay City Deal’s Economic Strategy Board (ESB).

During an international, private sector career spanning over 30 years, Mr Tomp has also held a number of senior positions in companies based in the USA and Australia.

The ESB will represent the wider community, including the private sector and third sector. It will act as the voice of business, provide strategic direction to the City Deal and oversee the development of business cases for each project. It will also have a role in advising the Joint Committee on opportunities to strengthen the City Deal’s impact.

Subject to the City Deal’s governance being agreed, Mr Tomp will be officially confirmed as ESB chairman.

Mr Tomp, originally from California, said: “Through an innovative public and private sector partnership, the Swansea Bay City Deal will considerably boost growth in sectors including digital enterprise, life sciences and well-being, smart manufacturing and sustainable energy production. This will help build and improve the Swansea Bay City Region for local people and local businesses throughout Carmarthenshire, Neath Port Talbot, Pembrokeshire and Swansea as a number of major projects unfold across South West Wales.

“As preferred candidate to become chair of the City Deal’s Economic Strategy Board, I’m extremely proud that I’ll play a part in delivering this tremendously exciting programme of considerable investment in coming years.

“The City Deal is vitally important because it will create thousands of new, well-paid jobs, while supporting existing businesses and entrepreneurs through more supply chain opportunities and the construction of state-of-the-art spaces for offices, clustering, research and development.

“Also potentially leading to new global export markets in the City Region, the City Deal will improve our economic well-being and raise aspirations, which is why I’m wholeheartedly committed to doing all I can to help ensure it realises its enormous potential.”

As well as his position at Valero UK, Mr Tomp has experience as a chairperson and member of Pembrokeshire College’s Board of Governors. He’s also been a member of Pembrokeshire Council’s A-Level Steering Group, the Milford Haven Enterprise Zone Advisory Board, and the Welsh Government’s Energy Wales Strategic Delivery Group.

Cllr Rob Stewart, Lead Leader for the Swansea Bay City Region, said: “There are five key areas of the City Deal, with Mr Tomp showing considerable experience in three of them – energy, manufacturing and skills.

“This, coupled with his hugely impressive international private sector and industrial experience, means he’s the perfect person to chair the Economic Strategy Board.

“The ESB will play a vital role in the City Deal’s delivery and impact in coming years, so we’re delighted to have chosen someone of Mr Tomp’s calibre as our preferred candidate.”

Alun Cairns, the UK Government’s Secretary of State for Wales, said: “The Economic Strategy Board has a critical role to play in how the Deal is developed and implemented.

“It’s essential that private sector expertise is the driving force behind projects within the City Deal. Not only will Mr Tomp be the voice of business in the region, but his international reputation will be an asset in attracting and securing new investment to the region.”

Ken Skates, the Welsh Government’s Cabinet Secretary for Economy and Transport, said: “I welcome Mr Tomp’s selection as the preferred candidate and the wealth of experience he can bring as Chair. The Economic Strategy Board will play a vital role in the delivery of the Swansea Bay City Region City Deal in representing the voices of the private, public and third sector. The Board will also support the more regional approach which is central to our vision for a more prosperous Wales, and a key component of our Economic Action Plan.”

As well as the chair, the process for selecting a number of other private sector representatives to sit on the ESB is progressing. Areas including life sciences and further education will be among those represented.

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Conservatives press for lagoon decision



Lagoon could inspire vast economic regeneration: Says Conservative AM Russell George

WELSH Conservatives have renewed calls for a decision to be made by the UK Government on the Swansea Bay Tidal Lagoon, and for fresh consideration to be given to the devolution of Air Passenger Duty to Wales.

Last year, the Hendry Review concluded that backing the £1.3 billion Tidal Lagoon is a ‘no regrets policy’, costing households less than the price of a pint of milk each year. Welsh Conservatives have consistently backed the tidal lagoon and it is hoped that the UK Government will give the scheme the green light.

Shadow Economy Secretary, Russell George AM, has also called on the UK Government to give fresh consideration to the devolution of Air Passenger Duty (APD), following the Chancellor’s Spring Statement announcement of a consultation on the impact of devolving short-haul APD to Northern Ireland – a country which already enjoys the benefits of long-haul APD.

Calling for a decision on the Tidal Lagoon to be made ‘sooner rather than later’, Mr George, said: “The Tidal Lagoon project could be the inspiration for vast economic regeneration in South West Wales as well as ensuring Wales and the UK becomes pioneers in the delivery of this technology.

“The scheme also holds great promise to be the most reliable and resilient source of green energy available, and the Welsh Conservatives have been supportive of this ambitious scheme since day one.

“Last year’s Hendry Review was emphatic and we remain as convinced as ever that this transformational project should be given the go ahead.

“Our green agenda is winning plaudits across the globe and this project will only serve to strengthen those credentials in the bold new world post-Brexit.”

In 2012 the UK Government’s Silk Commission recommended APD should be devolved to Wales for direct long-haul flights initially, followed by full devolution as part of the UK Government’s future work on aviation taxation.

Requesting the UK Government give fresh consideration to devolving APD, Mr George added: “We believe Air Passenger Duty should be devolved to Wales, just like it is to Scotland, and in part to Northern Ireland.

“With a consultation recently announced by the UK Government on devolving the remaining element of APD to Northern Ireland, we see no reason why such a process cannot be forthcoming for Wales.

“We acknowledge concerns held in some quarters but a consultation on this subject would be welcome progress and would allow for these issues to be explored in greater detail.

“Welsh Conservatives believe the devolution of Air Passenger Duty holds the key to increasing passenger numbers and overseas route options for Cardiff Airport, helping to make it more competitive and providing a shot in the arm to the Welsh economy.”

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