Bigger firms facing squeeze on profits

One in 10 contractors in the engineering construction sector is operating at a loss, according to an industry survey. And the largest firms are said to be under most pressure, with 21% reporting negative margins.

A breakdown of profit levels is revealed in the inaugural Key Performance Indicator survey, published by the Engineering Construction Industry Association (ECIA). The survey also points to the sector being a relatively safe area, with low levels of absenteeism and a high degree of employee satisfaction.

ECIA director Brenig Williams said: "Many companies - especially the larger ones - are failing to make a decent profit or any profit at all, confirming the difficult commercial conditions that UK engineering construction contractors have been experiencing for some time."

Profit-wise, just over half of smaller firms showed margins of 4% and above, against only one in five of the bigger contractors. The report also noted a lower incidence of high profit margins (10% and above) in the engineering construction sector compared with the rest of construction.

All ECIA members were asked to respond to a safety questionnaire. When asked whether health and safety items were a permanent item on the board agenda, every single response was in the affirmative. Some 88% had seen their company health and safety policy amended in the past 12 months, and 84% said they had a specific health and safety training programme.

The average number of reportable accidents per 100,000 employed is shown to be 509 - a significantly better performance than construction as a whole.

A relatively low level of absenteeism is revealed. On average an employee is absent for 2.6 days for every 220 working days per year, and generally high levels of staff satisfaction were reported.