Figures from the Electrical Contractors' Association's (ECA) Q1 2011 Member Business Trends Survey show that the first three months of the year have been rife with uncertainty, as members express concern about diminishing workloads for the rest of 2011.
While the majority of firms report that turnover remained constant or grew during Q1, there is less optimism for the future, with only 17 per cent of members surveyed expecting to see an increase in business during Q2, down 4 per cent from those polled in the same quarter last year.
However, firms with turnovers between £1 million and £5 million a year, are the most optimistic. Around 36 per cent saw an increase in business in Q1, and 29 per cent expect to see this continue over the next year. However, businesses with a turnover of less than £200,000 a year are less positive, with 18 per cent seeing growth in Q1, but 41 per cent anticipating a decline in work over the next year.
Steve Bratt, ECA Group CEO, comments: It is clear that the construction industry is still facing challenges in a tough economy. Our members are having to work as hard as ever to secure work. There is a great deal of uncertainty in the market, as the impact of legislation such as the Localism Bill and the review of feed-in tariffs (FITs) have yet to be fully realised.
However, moves such as the Green Deal, which could see an increase in energy efficiency installation projects for homes and commercial properties, could provide a valuable new revenue stream for electrical contractors. ECA members are the frontline troops in delivering more efficient and sustainable buildings, thanks to their expertise in installing microgeneration, smart monitors and lighting. The Green Deal is going to create opportunities for all sizes of contractors and so it is vital they upskill staff to ensure that they can take advantage of what will be a growing market.
A regional divide is also apparent, with contractors facing differing fortunes depending on where they are in the country. In the south east, the mood is more positive, with 63 per cent of firms polled saying they expect to keep business steady or grow over the next 12 months, says Bratt. However, in the west, 40 per cent of contractors say they saw turnover decline during Q1, and 38 per cent expect this to continue over the next year.
The ECA will continue to provide commercial support and advice to its members to help them win more work. Our Sustainability Roadshows have already been highlighting how to take advantage of new environmental initiatives. Contractors can also enrol on the free FLASH initiative. This includes the ECA-run Electrical Services Network, which provides a chance to learn more about topics as the impact of FITs and the Microgeneration Certification Scheme (MCS), concludes Bratt.
†Q1, 2011 saw continued pessimism following Q4 2010:
- Overall, more than 38 per cent of the 320 Registered Members who completed the Q1 survey report that their turnover in Q1 was the same as Q4.
- Just over 24 per cent reported an increase.
- 38 per cent reported a decrease.†
†ECA member businesses with turnovers of £1million to £5 million are more optimistic about the next quarter and over the next 12 months than all the other business categories. For all the others, the outlook is pessimistic.
†Member businesses in the Midlands and the South East regions saw some improvement in turnover and are the most optimistic over both the next quarter and the next year.
†Winners: Businesses with turnovers of £1million to £5 million; 30 per cent expect to see an increase in turnover in the next quarter and in the next 12 months. This is an underlying trend that has been gradually more evident for the last four quarters.
†Losers: All of other business size categories; they are expecting either a fall or flat turnover over the next quarter and over the next 12 months.