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Materials’ price rise squeezes SME builders

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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.”

Business

Herald announces £1.5m investment in local journalism

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A WEST WALES based newspaper group is to invest £1.5m in the next twelve months, creating up to 10 new jobs while safeguarding a further 25 full-time positions.

The good news comes as the Herald group of newspapers, based in Milford Haven, Pembrokeshire, secured significant new investment to secure its future.

The cash injection will also see a relaunch of Herald Newspapers’ three print titles, The Pembrokeshire Herald, Carmarthenshire Herald and Llanelli Herald, as well as it’s news sites which include the Ceredigion Herald and the new Swansea Herald – which is currently under development.

The firm has faced “considerable financial challenges” over the last two years following the closure of one of its print titles, The Ceredigion Herald, under a previous owner, Managing Director David Lee confirmed.

A small number staff and freelancers were left unpaid when Megagroup Newspapers went into liquidation in January 2017 – some of those have now been repaid, with others set to receive their remuneration shortly.

Most of the original management and staff – a twenty-five strong team continued to work on Herald titles under the ownership of Herald Newspapers plc – and kept the three of the four newspaper titles in print during corporate restructuring.

David Lee said that keeping the Herald titles going following the closure of The Ceredigion Herald had been a ‘near impossible task’.

Editorial controls were also not tight enough for a fourth title – leading to the conviction of Group Editor Tom Sinclair for putting the identity of the victim of a sexual offence at risk, and for naming a 17-year-old fisherman who crashed his boat – also unlawful.

Mr Lee said: “Launching a fourth print title, The Ceredigion Herald, was a bridge too far” for MegaGroup Newspapers – and losses started to mount quickly – almost bringing the other three titles down with it .

Popular: 45,000 people read Herald titles each week in west Wales

“The new investment –a significant amount – will secure the future of the Herald print tiles for the next two years, whilst we move our business model towards a digital offering.

“It will also allow us to invest in recruiting more journalists, increasing the speed and scope of our news coverage.”

The newspapers’ future was secured by its sale to private investors based both in the UK and overseas.

The new investment vehicle for The Herald titles is Herald News International Inc., a new company incorporated in the United States last month, due to one of the major investors – an Omani – having significant holdings there.

David Lee added: “Our commitment is to provide a truly local news service to west Wales. “While a lot of the news about local newspapers is all doom and gloom, HNI has seen something in The Herald’s brand worth investing in.

“This is very good news for the region and a sign that local news is not dead.”

Community: Herald titles are campaigning newspapers

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Business

New drive supports women entrepreneurs

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ECONOMY MINISTER, Ken Skates is calling on the business community to support a new initiative aimed at increasing the number of women entrepreneurs in Wales and providing them with the best possible support.

The Welsh Government’s new Supporting Entrepreneurial Women programme was informed by the work of a panel of experts, convened in 2017 to consider how best to encourage, develop and support female entrepreneurship in Wales.

The panel, chaired by Helen Walbey, considered an array of academic evidence and literature on women in entrepreneurship, spoke to a range of businesswomen, representative groups and partner bodies, and aligned its work with the principles of the Massachusetts Institute of Technology’s Regional Entrepreneurship Acceleration Programme which is championed by Be the Spark in Wales.

The result is a new Framework for Supporting Entrepreneurial Women in Wales and a Good Practice Guide to inform how the Welsh Government and business community works to drive the number of women entrepreneurs in Wales.

The Welsh Government have also responded by publishing the Business Wales Action Plan which identifies 10 specific ways in which the Welsh Government and business community can improve. From providing more gender focussed business support and confidence building, increasing the number of female business advisors and mentors in Wales and promoting the career successes of prominent female entrepreneurs including through business awards, the action plan aims to create the right environment in which female entrepreneurs can prosper.

There is also renewed focus on engagement with women entrepreneurs to understand the barriers they face, improved availability of finance options with no restrictions that unfairly affect women, and a Good Practice Guide that encourages business support organisations to adopt ways of working that support female Entrepreneurship.

The Economy Minister launched the Framework, Good Practice Guide and the Action Plan at a celebratory event in Capital Law. This will be followed by regional events, jointly organised by the Welsh Government and Lloyds Bank, to ensure that business groups right across Wales are aware of the new resources and their role in supporting female entrepreneurship.

The Economy Minister said: “The underrepresentation of women both as business owners and at a senior executive level is well evidenced and there is no doubt the gender gap is hindering women from achieving their full economic and personal potential.

“Our Economic Action Plan focuses on creating the right environment to enable entrepreneurs to prosper and grow and obviously this must apply to women, just as much as men.

“The work undertaken by the panel of experts recognised the progress that we as the Welsh Government and business representative groups have made in recent years in supporting female entrepreneurship – but the message is clear. We must do more, and with Brexit presenting challenges of an unprecedented scale, now more than ever we need our best talent around the table.

“I call on the business community and financial institutions to work with us to adopt a more gender focussed approach to their work. I hope they will use our new Framework and Good Practice Guide to ensure they play their part in building an environment where women entrepreneurs are encouraged and properly supported to reach their full potential.“

Jane Hutt, Deputy Minister and Chief Whip said: “All women should be given equal opportunities and representation at the most senior level. Helping to understand and remove barriers that women face in entrepreneurial opportunities will support the potential growth of women in business. Through this support, we hope women will be more fairly represented and can flourish in the business sector.

“Although, there is still so much more we can do to achieve better gender equality, this initiative will help women to achieve their full potential and to move away from the underrepresentation of women at senior roles.”

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Business

Local companies aim for export boost

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LOCAL food and drink companies are preparing to attend one of the world’s largest food trade events in Dubai, United Arab Emirates, from 17-21 February. Held at the Dubai World Trade Centre, Gulfood will attract over 98,000 visitors over the five days, welcoming more than 5,000 exhibitors from 193 countries showcasing products across 8 primary market sectors.

Supported by the Welsh Government, 14 Welsh companies from across the food and drink sector in Wales will be present under the Cymru/Wales banner all looking to promote their products and increase their export markets.

The Welsh companies exhibiting include Llaeth y Llan/Village Dairy, Rachel’s, Dairy Partners Ltd, Daioni Organic, Fayrefield Foods Ltd, Calon Wen Organic Dairy, The Lobster Pot, Ty Nant Spring Water, Euro Foods Group UK, Prima Foods UK Ltd. Alongside these, representatives from Castle Dairies Ltd, Hybu Cig Cymru/Meat Promotions Wales, Dunbia and Village Bakery Ltd will also form part of the Export Visit.

Lesley Griffiths, Minister for Environment, Energy and Rural Affairs, believes that it is vital for the industry to take advantage of such opportunities to continue to develop global markets: “Our food and drink sector is one we can rightly be proud of and we need to ensure that everybody knows about it. It is important that we maintain our visibility and showcase our innovative products at key global trade events.

“We are committed to supporting Welsh businesses having a presence at events such as Gulfood, as it is crucial in giving ourselves a strong platform to sell Welsh produce around the world. With Brexit approaching it is more important than ever that we champion Welsh produce and support food and drink businesses in every way we can. We need to help them build relationships with businesses in their sector so they can learn about new technologies, explore foreign markets and be competitive in their industry.”

A company looking to make an impact and will be introducing their Afternoon Tea range at Gulfood is Llanelli’s Prima Foods.

Their classic British gluten-free afternoon tea range features both mixes and ready to bake goods, to include Scones, Choux Pastry and Belgian Chocolate Brownies.

Massimo Bishop-Scott, Head of Innovation at Prima Foods said: “Afternoon teas have seen a bit of a resurgence and are an incredibly popular menu offering. They attract consumers outside the normal lunchtime/dinner eating occasions which provide incremental revenue for restaurants and hotels.

“We spotted that there was a gap for great tasting gluten-free offerings on the afternoon tea menu and set about making products that tasted just as good as the gluten-containing equivalent. A number of our customers in the UK have been so impressed with the taste and texture of our products that they have replaced their existing gluten containing range with our Chefs Promise range.”

One company looking to build on its existing links with the UAE is leading organic milk producer Daioni Organic from Boncath.

In June 2018, they began working with Truebell, their exclusive distributor to the UAE and have launched into Carrefour and Choithrams with other retailers to follow throughout 2019.

In 2018, Daioni launched a new iced coffee latte which they will be presenting at Gulfood for the first time this year.

Chief Operations Officer at Daioni Organic, Daniel Jones said: “We have seen high growth in the overseas markets in the past couple of years, particularly from the Middle East and Asia. We see this expansion as well as our presence at Gulfood, as a great opportunity to enter growing markets and to invest in our existing relationships.”

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