Credit crunch hits small firms

Housebuilders are facing the worst financial situation for 15 years, according to industry experts. Roger Humber, strategic policy consultant ath the House Builders Asssociation told Contract Journal (CJ) that small and medium firms who had made unfortunate land purchases could go to the wall as sales fell back.

In it's lead story CJ reported the demise of two housebuilders. Sunderland firm Wilcomm Bespoke Living which has gone into administration after selling just one of 25 homes it built in two developments. Meadgate Western also went into administration, owing £36m.

Building reported a surge in the number of SMEs going bust. The London Gazette, which reports on UK corporate failures, recorded that 76 individuals or companies were wound up, went bankrupt or became insolvent in March, including 10 electrical contractors in one week.

Ian Johnson, managing director of elecytrical engineer Eric Johnson or Northwich, told Building: 'The credit crunch is happening. People are taking big jobs on and underquoting them to get work and they've got people who won't pay. In the next 12 months I think we'll see a vast increase in companies going to the wall.'

Meanwhile the British Council of Shopping Centres was telling Construction News that the retail sector would remain buoyant. The council's chief executive said that schemes which had already been planned would go ahead and that existing operators would be looking to refurrbish to compete with new schemes.