Construction companies remain cautious over future growth

UK construction businesses remain relatively guarded about their long-term growth prospects, according to research from Santander Corporate Banking.

Directors of companies with annual revenues of up to £20m are expecting, on average, to increase their turnover by an average of 74% in the next five years, compared with the national average of 104%. Only the retail sector appears less optimistic about the future, predicting an average turnover of 52% in the same period.

In the short-term, construction companies are firmly focused on survival with the active pursuit of growth taking a back seat. Half (52%) of all directors say that survival is their immediate key priority, compared with 30% claiming they are focusing on organic growth.

The tough trading environment is seen to represent the biggest challenge to construction companies’ growth prospects, cited by just over half (53%) of businesses. Hiring and retaining quality staff also remains a key obstacle in the construction industry, according to one in five (20%) directors. Yet with many businesses still heavily focused on reducing company costs as a major priority (37% compared to 29% nationally), such an issue is unlikely to resolved in this sector any time soon.

Steve Pateman, head of Santander corporate and business banking, said: “Many businesses are clearly remaining cautious in the current tough trading environment but it’s encouraging to see that in the longer-term they are more positive about their prospects.

“The country is reliant on these businesses to drive the economic recovery and it bodes well that they are confident in their growth potential. At Santander, we are committed to supporting ambitious companies break through the challenges and barriers they face, helping them to fulfil their growth ambitions.”

Manufacturers are most optimistic about their prospects, expecting to grow by an average of 138% in the next five years. Financial services (108%), wholesalers (85%) and construction companies (74%) follow, while retailers remain relatively cautious expecting to grow by 52% over the period.

Smaller companies are most optimistic about their growth prospects with the average company with a turnover of less than £500,000 expecting to grow their business three-fold (by 202%) over the next five years. However, larger companies also have ambitious expansion plans, with businesses turning over between £5million and £20million expecting to grow by an average of 86%.

Businesses in Scotland and Northern Ireland are most optimistic about their growth prospects over the next five years, expecting to grow by 194% on average. Businesses in the South East (136%) and South Wales and the South West (123%) also show strong levels of optimism. However, businesses in the North West, West Midlands and North Wales are less optimistic, expecting to grow by around 50% over the same period.

Your News

If you've got a story that would be of interest to Builder & Engineer readers, send us an email

Features

2016-09-01 11:53

Firms are embracing new methods of construction with a study revealing the majority have used innovative techniques in the last three years. Claire Cameron takes a look at what is on offer

2016-08-03 10:20

In the wake of the vote to leave the EU, the potential impact of Brexit on development needs to be considered, specifically in terms of environmental regulations and State aid, as well as the possible impact on UK infrastructure projects, in particular the proposed Heathrow expansion and Hinkley Point C, says Mark Northey, a partner in the projects team at Ashfords LLP.

2016-07-25 10:35

The UK has an ageing population – effectively, this means that for the first time ever there are more people of pensionable age than children under the age of 16 in this country.

2016-07-05 10:05

Defibrillators located on construction sites can save your life. Rosa Mitchell from independent supplier Defibshop gives her advice.

CONSTRUCTION workers are often faced with a multitude of dangers at work, from the risk of electrical hazards to excavation and trenching accidents.

2016-07-01 10:06

Claire Cameron investigates the topic of daylighting and how the use of windows and rooflights can help bring sunlight into buildings all year round.

WITH increasing energy costs and concerns about global warming, the use of windows and rooflights to bring sunlight indoors is gaining momentum as more people look to natural sources to save money and the environment.

2016-06-28 12:48

Within days of the announcement of the Brexit vote, we’ve seen major construction company stocks crash by almost a quarter, says Chris Ingram, managing director of Cornish-based underfloor heating specialists Continental Underfloor.

2016-06-15 15:36

Commercial vehicles can drive success. Claire Cameron looks at why firms should upgrade and whether it is best to buy or rent a new fleet. With expert advice from David Brennan, CEO of Nexus Vehicle Rental, Dominic Reid of Northgate Vehicle Hire, Gareth Jones of Dawsonrentals Vans and light commercial vehicle industry consultant Tim Cattlin.

2016-06-08 10:21

The UK’s European Union referendum is proving to be a hugely divisive topic with the population split between leaving and staying. A potential Brexit on June 23 could have far-reaching consequences throughout almost every aspect of life from house prices to immigration policies. But what would leaving the EU mean for the construction sector? Those working in the industry give Builder & Engineer magazine their views.

Free E-newsletter Sign-Up

Sign up for our free e-newsletter

Looking for a company or service?