part time job

Industry cuts its cloth as austere times beckon

The monthly release of construction activity data has changed from showing whether things are up or down, to highlighting just how far down things have now travelled.

Today we got the sixth-straight month of contraction according to PMI data, and the second-fastest fall in activity since 2009. June of this year still holds the crown for the fastest drop.

Yet, when I speak to contractor bosses, the picture seems brighter.

Many tell me there’s plenty of work out there, sometimes with the caveat that there’s a bit of softness in London and the South-east. One CEO recently told me his estimating department had “never been busier”.

What is actually happening then? Is the PMI data giving us false signals? Are company bosses putting a spin on things? Who should we believe?

Actions speak louder than words, and a clear sign that the data is painting a true picture is that job cuts are increasing.

More and more contractors are cutting their cloth according to what they expect the situation to be in a year or two.

Aside from Kier reiterating its plans to cut 1,200 jobs by mid-2020 a couple of weeks ago, this week saw Esh reveal a restructure and headcount reduction, while last month brought news of redundancies at Osborne.

On top of these recent cuts, this year’s CN100 found six out of the top 10 largest firms had reduced their staff numbers in the period covered by their most recent set of accounts.

Today’s PMI survey showed the trend for trimming staff numbers is now accelerating with jobs being cut at the fastest rate since December 2010.

Laying people off is a last resort for contractors when it comes to responding to lower demand, so what we’re seeing shows how difficult things have become.

New orders drying up as the market shrinks raises the risk of a business finding itself with overheads that can’t be covered by the revenue from work it has secured.

If a contractor truly expects demand to fall significantly in the next year, then that cost base must be reduced to avoid being caught out. The industry’s small margins leave little headroom to absorb excess costs.

The alternative is suicide bidding to win jobs and get cash in, with the hope that barely-break even jobs don’t slip into loss-making ones that are covered by potentially better-paying ones around the corner.

Cutting staff is seen as a necessary evil to trade through a tougher market without storing up problem jobs for the future.

Bosses can’t be blamed for putting a positive spin on the current market conditions, but increasing job cuts reveal the reality of the situation and show that the toughest decisions are being taken now to weather tougher times ahead.

The post Industry cuts its cloth as austere times beckon appeared first on Construction News.