This may seem a little harsh, but the statistics speak for themselves: 12% of all insolvencies were construction companies or those related to the sector during the final quarter of last year.
So the industry needs to modernise – an increased emphasis on modular and other prefabrication techniques would lower cost, and is a method prevalent amongst American firms.
Contractors need to do more forward planning. Many firms were hit by the downturns in the commercial and industrial markets, having failing to anticipate the lack of demand for office space and the number of sheds that now lie empty.
Subcontractors are particularly hard-hit, as major contractors do their best to pass on their squeezed margins. Too often suppliers are slow to ensure that the bigger companies pay them. Understandably, subbies don't want to be too demanding with their larger brethren as they often want to form long-term relationships with them. But legally they should chase their money, and ethically they have every right to.
The expansion of the European Union is not going to make things any easier for small and large players. Already the UK industry is struggling to fight off more efficient European competition, but many of the countries coming in can offer much cheaper prices for materials such as glass. And labour costs are a particular problem. Workers on the Continent might find that they can earn three times as much in the UK.
There is some good news – in absolute terms, insolvency amongst UK contractors is falling. But with six firms collapsing every day, it is still much too high.
Middleton Partners is a London-based insolvency consultant. See www.middletonpartners.co.uk