Civils pour water on overheating fear

Civil engineering contractors have dismissed as 'alarmist' reports that construction is beginning to show early signs of overheating which they say may deter clients from letting new contracts.

Some industry sources have suggested that skill shortages, in particular, are being talked up by labour suppliers anxious to justify their own attempts to raise prices.

But John Hackett, director-general of the Federation of Civil Engineering Contractors, said this week: 'We have no capacity problem and we don't think we are going to have any cost increase problems.

'So the message to clients is to go ahead and place your contracts.'

Commenting on the FCEC's latest civils workload survey, Hackett said the results confirmed the sector's slight trading improvement reported in the spring.

At the same time, he warned those who were inclined to overstate the extent of the recovery to 'cool it.'

He said: 'There has been a lot of comment recently from various quarters about escalating costs and about skill shortages. From the point of view of the civil engineering sector at least, much of this talk has appeared exaggerated.'

The survey showed that less than a fifth of all firms expect new work orders to rise over the coming year. Only one in ten was expecting to take on more operatives or staff.

Six out of ten firms reported costs rising faster in July than a year ago. But at this time last year there was hardly any movement in prices at all.

Some reports of specific increases of 10% or more were attributed to local conditions. Contractors have noted particular problems over the availability of aggregates and tipper wagons for their transport.

Meanwhile, the latest civils survey has pointed to some marked regional variations. The Midlands shows the strongest trading prospects, while the North West of England and Scotland have seen the sharpest decline in activity.

Current general forecasts for construction point to a 2-2.5% increase in total output this year. In the view of the civils, according to Hackett, that should not lead to any serious pressure on prices, materials, or labour.
WORKLOAD TRENDS SURVEY JULY 1994

- order books compared with 12 months ago