‘Economic recovery can be dangerous’

More firms go to the wall during a recovery than fail in the depths of a recession, B&ES president Bruce Bisset has warned.

Speaking at the annual convention of the Mechanical Contractors’ Association of America (MCAA) in Scottsdale, Arizona, Mr Bisset said this can be because an upturn in construction tends to occur at a relatively late stage in the overall economic recovery cycle. The bulk of building engineering services work is focused on a similarly late stage in the construction process itself.

“This means that the cost of labour and materials will already have begun to rise long before the start of a building engineering services project; while client expectations
will continue to hold down prices and keep margins tight,” he said.

He added that taking advantage of opportunities for growth was likely to require “an investment in people, assets, equipment and business infrastructure”. But that, while turnover might have improved, cash flow could become overstretched, to the extent
that any unforeseen circumstance could lead to collapse.

On a brighter note, Mr Bisset reported that the findings of the most recent state of trade survey carried out among B&ES members had indicated that business opportunities had increased in the second half of 2013 – with more firms acknowledging a rise in both orders and enquiries compared with the previous six months, and half of respondents reporting a rise in their turnover levels.

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