Rick Willmott warns main contractors are yet to face the worst and should start preparing
Main contractors must prepare for a five-year recession to start now, Rick Willmott, chief executive of Willmott Dixon, has warned.
He has said that most large firms have not felt the full impact of the economic downturn yet.
In an exclusive interview with Building, Willmott said that 2011 would be the year most main contractors would start to see times getting really tough, because of soaring supply chain and materials prices.
He said: “There is no question any of the large contractors have been in a recession yet. But it’s coming.
“The harsh reality that most of us are contemplating is how to make it through the next five years as the price squeeze stays on at main contractor level.”
He added that the problem was being fuelled by contractors pricing below cost, effectively gambling on the future direction of the market as well as making it harder for other firms to win tenders without competing aggressively on price.
This is likely to mean more consolidation and failed businesses as some firms are unable to deliver schemes at the price they have quoted clients, once prices rise.
According to Willmott, the company has “reached the position now where, as a major primary tier contractor, we have seen supply chain and materials prices falling in front of us and now they have hit the bottom”.
Willmott Dixon has been weathering the economic storm well over the past two years.
Willmott predicts the group will post a flat turnover this year and next at about the £1bn mark.
The company reported a £21m pre-tax profit for the year to 31 December 2009. The firm is now a hybrid contractor/housebuilder.