I refer to the column “An offer you can’t accept” by Rudi Klein (1 December, page 45).
The trend of main contractor procurement teams setting up supply agreements directly with manufacturers is causing concern among some specialist subcontractors, and we believe it could create a barrier to improving efficiency. It is also potentially restricting competition.
Mr Klein suggests that some main contractors lack an understanding of the benefits that specialists can bring to projects. While many preach the mantra of supply-chain management to improve efficiency, restricting subcontractors in the choice of materials companies can seriously affect their ability to control suppliers and be responsible for the outcome of a contract.
Why remove this freedom to choose a suitable supplier? Could it be that such moves are aimed at controlling the prices that specialists have to buy at so that main contractors and manufacturers can improve their own margins and protect market share?
Generally, large specialists buy at better or on similar terms to a main contractor, so is it more cost effective? Our members have noticed that where such agreements exist, material prices are higher than normal market rates. If main contractors are receiving a rebate from a manufacturer they are then, probably inadvertently, paying a premium to the subcontractor with a margin attached.
In an era marked by the pursuit of improved productivity and efficiency gains, is this really good business?
Emma Tomlin, director, Federation of Plastering and Drywall Contractors