Four in five SMEs hike their costs
03 AUG 2021 BY TIYA THOMAS-ALEXANDER
Four out of five SME builders raised their prices in the second quarter of 2021 as materials costs continued to rise, the Federation of Master Builders’ latest State of Trade survey has revealed.
The price hikes come on the back of continued strong demand, with enquiries for new work growing at the fastest pace in a decade. FMB chief executive Brian Berry said the increased workloads had also brought challenges: “Rising workloads are bringing mixed blessings for builders across the UK,” he said, adding that demand for materials had increased lead times to the point that new projects were at risk of being cancelled.
Out of the 259 businesses surveyed, almost every single one (98 per cent) said prices had risen in the last quarter. Berry said: “The percentage increases in materials is mind-boggling; every order costs more than the last across the board.”
Firms also reported growing shortages of labour, particularly skilled trade. Around half of them said they had trouble finding carpenters and bricklayers (53 per cent and 47 per cent respectively) in the last quarter.
Weybridge-based builder Andy Stevens from Eclipse Property Solutions told Construction News recent price rises were long overdue: “The reality is, I don’t feel like us trades are paid enough and haven’t been for a while. Up until recently, all the subbies I know and work with haven’t put their prices up for years. For 8-10 years, it’s all been pretty much the same. In a situation like this, where supply is way less than the demand, trades put their prices up–especially the good ones,” he said.
The FMB warned rising prices increased the risk of rogue traders taking advantage of the demand to make “unrealistic quotations” to secure business. “Some members are increasingly concerned that rising prices will spark a wave of rogue trading as customers, desperate to get their building works completed, will place themselves at the mercy of cowboy builders,” Berry said.
The trade body called on government to intervene to help smaller businesses secure materials while shortages persist: “Greater support is needed from government and the whole industry to explain to consumers why prices are going up,” Berry said. “At a time when small building companies are struggling to find building materials, it becomes ever more important for them to have the same access to materials as the larger firms.”