By Kristy Dorsey
Government support for Scotland’s crippled construction sector must be fast-tracked, industry leaders say, as cash flow has completely dried up for nearly 80% of all firms.
A survey carried out by the newly-established Construction Industry Coronavirus (CICV) Forum found that 79% of 377 construction companies questioned have experienced a complete halt in cashflow. More than half are owed payment for work already completed, with invoices now overdue.
However, very few have yet to receive emergency relief cash through either the Coronavirus Job Retention Scheme or the Coronavirus Business Interruption Loan Scheme. Many are concerned that aid will come too late.
As one respondent summed up: “Cashflow is a major concern; we will only last a maximum of six weeks if Government funding or bank loans don’t come through. We will then have to start making staff redundant.”
More than two-thirds of those polled during the first two weeks in April had already furloughed staff, and 37% had completely shut down operations. A further 54% were carrying out emergency work only.
John McKinney, secretary of the National Federation of Roofing Contractors (NFRC), said the “disturbing results” from the survey clearly illustrate the extent of the economic damage across the sector, despite measures to alleviate the pain.
“It is clearly incumbent on all branches of Government and public bodies to step up efforts to expedite payments under the Coronavirus Job Retention Scheme announced by the Chancellor in March,” he said. “However, there is a danger that even this may be too late for many firms, especially smaller enterprises.
“The same urgency is required for the Coronavirus Business Interruption Loan Scheme, which needs to be fast-tracked. Nearly half of companies which have applied have found the process cumbersome and difficult.”
The NFRC is one of 16 members of the CICV Forum, which was set up in March in response to the Covid-19 crisis. It is made up of bodies representing small and large firms from the building, engineering, surveying and architectural professions, and is chaired by SELECT, Scotland’s trade association for electrical contractors.
More than 56% of firms surveyed reported overdue invoices outstanding to public sector clients, while nearly the same – 55% – had invoices overdue to the private sector. More than a quarter reported having staff or sub-contractors who are self-isolating.
Fiona Hodgson, chief executive of plumbing federation SNIPEF, said respondents are also calling for greater clarity from both the UK and Scottish Governments about what work can be carried out. The CICV Forum has issued its own guidance in an attempt to resolve conflicting messages.
She added that while firms of all sizes are suffering, it is the smallest that are coming under the greatest financial pressure.
“Small construction sector companies are taking the brunt of the shutdown at the moment and many simply do not have the resources to sustain a long period of inactivity,” said Ms Hodgson, who is leading the Commercial Sub-Group of the CICV Forum.
“As the CICV Forum survey shows, cash flow is a major issue and fast-tracking of financial support from the Government will be crucial as this crisis develops.”
Elsewhere in the sector, the Construction Scotland Innovation Centre (CSIC) has launched a new initiative to promote industry collaboration in tackling the fallout from the pandemic.
Dubbed i-Con, the initiative includes an Innovation Challenge Fund, a Knowledge Hub and an Online Learning Platform. Its aim is to bring the public and private sectors together with academia to work on solutions to problems in the construction industry arising from the coronavirus outbreak.
“We want to encourage those faced with challenges, and those who can offer knowledge and expertise, to come forward and use the platform to contribute a positive legacy for the built environment community and society more widely,” CSIC chief executive Stephen Good said.
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