Only 16% of trade contractors working near capacity

Trade contractors are suffering their lowest work levels on record with only 16% of firms working anywhere near capacity.

The latest NSCC State of Trade Survey for the second quarter of 2009 revealed that only 16% of specialist contractors were working at 90% capacity or more.

Two thirds of respondents reported further reductions in the number of orders compared with the previous quarter.

But there are signs that the market is beginning to stabilise with only a third of respondents reporting an increase in suppliers prices compared to 88% this time last year.

A similar number anticipate an increase in workload over the next three months and, for the second quarter running, there were fewer businesses planning to downsize.

The average number of direct employees remained constant with almost a quarter of respondents planning to take on at least one new apprentice over the coming year.

Slow payment continues to affect the supply chain with 91% of respondents waiting longer than 30 days as advocated by government and a fifth waiting over 60 days for payments to be made.

The amount of overdue retentions withheld has increased to almost 40% of all retention monies, a clear indication that cash flow is being restricted.

A member of the Association of Interior Specialists (AIS) summed up the view of the specialist sector when he said that it was "difficult to trade in what is a brutal market".

The impact of poor payment practices continues to be felt widely with a Contract Flooring Association (CFA) member stating that "the sooner specialist trades have security over payment the better" and a member of the National Federation
of Roofing Contractors (NFRC) commenting that "retention remains an important source of capital tie up".

The confederation said: "This reinforces the need for the NSCC Fair Payment Campaign to ensure that the government’s commitment to fair payment is passed down the supply chain."