WHEEL OF FORTUNE TAKES A RIGHT TURN

On the face of it, after the telephone-number losses of the past four years, this season's results are a return to modest respectability. Profits are up everywhere, and red ink has been replaced by black.

Closer examination, sadly, reveals a less healthy state of affairs. Profit growth at the majors has been driven mainly by housing turnarounds, and these have been engineered more by the rich 1993-94 crop of rights issues, which allowed a tidying-up of corporate balance-sheets and an expedient rush for volume, than by all-round improvements in the economy at large.

Contracting remains the sick member of the construction family, and although some, such as Balfour Beatty, still bring home 2% plus margins, most pure contracting domestic divisions have made, at best, meagre contributions to group profits. This is despite dedicated managements and workforces across the board, who have given their all to bring home some bacon in market conditions as cold as charity.

Judging by the comments of chairmen at results announcements, many of whom all talked of a fall in orders, this depressing state of contracting affairs is unlikely to alter soon. The over-capacity, and the lack of bold rationalisation to solve it, will ensure that. As a result, job shedding will continue to be a harsh fact of contracting life.

Thankfully, some brighter spots emerged from the current results which should allow contractors better returns from their efforts. Overseas work was one of them. Most of the majors have quickly re-established their overseas presence, and although profits can be slow in coming on the major projects, there is every indication that they have chosen wisely where they concentrate their resources.

On the home front, niche tendering is paying for many, including the smaller contractors, with facilities management proving the star performing division. Amey, for one, has quickly built a very healthy operation and has confidence of great potential here. Even plant hire, for so long seen a desperately difficult area, has come good for a number of players this year.

Private finance is the other longer-term hope. Progress is still painfully slow, but the feeling persists that this is the game that every serious contractor must be in. One day, it seems certain to deliver.

For the moment, though, the daily grind of construction continues. This has never been a less than demanding business. These days it has become one of the most gruelling, sapping occupations going. Put in that context, the turnaround in construction's fortunes is a tribute to all who work in it.