Civils contractors facing 'deeply worrying' downturn

Civil engineering contractors have warned of a sharp drop in confidence in the sector as they see a "significant slowdown" in workloads.

The news came as part of the Civil Engineering Contractors Association's (CECA) quarterly Workload Trends Survey, which reported a continuing downward trend in the negative results seen in the previous quarter as they suffered a sharp drop off in preliminary works for housing developments in the early part of 2008.

Rosemary Beales, director of CECA National, also highlighted "fresh and equal concern" that bigger contractors were starting to feel the pinch and that firms were losing confidence that investment in critical national infrastructure would not be diverted to other areas of public spending.

The worrying findings raised the prospect that the construction downturn, so far confined to the private housebuilding market, is starting to spread to other sectors of the industry.

CECA reported that the overall workload balance (the difference between the number of contractors reporting a higher workload compared to those reporting a lower workload) stood at -18% in Great Britain, down from +38% in July 2007.

Scotland still showed a positive balance of +17% thanks in large part to a robust programme of public works.

But England and Wales were much more gloomy, with figures of -22% and -32% respectively. Last year England was much more optimistic, at +45%.

Roads, rail and airports were all still in positive territory but all other areas of work were dropping off, according to members. Strategic roads stood at -21%, local roads at -19%, water and sewage at -13%, with preliminary works at -38%.

Rosemary Beales, director of CECA National, said: "Civil engineering is showing signs of a deceleration in workload, in line with the wider industry picture.

"Smaller contractors, particularly those engaged in preliminary works of new housing and other developments, have continued to struggle and it remains a deeply worrying trend. Of fresh and equal concern is the drop in workload for the larger contractors reflected in the difference between the July survey and the previous two quarters."

"The latest survey also reveals a sharp change in the previously optimistic outlook among contractors. Expecting workload, new orders and R&M jobs to drop sharply in the next 12 months shows contractors are clearly not confident that investment in critical national infrastructure will not be diverted to other areas of public spending.

"Major projects such as Crossrail and new-build nuclear need to move forward at a steady pace if the Government is to combat this loss of confidence."