Engineering services sector ends 2016 on high but material and labour costs remain a concern

Despite rising material and labour costs, the engineering services sector is “powering forward” with more than three quarters of firms seeing turnover increase or remain steady during the final quarter of 2016, a new study reveals.

According to the Scolmore-sponsored Building Engineering Business Survey - which is run in partnership with the Electrical Contractors’ Association (ECA), the Building Engineering Services Association (BESA), and Scottish electrical trade body SELECT - over three in four businesses (78 per cent) in the sector ended 2016 on a positive note.

However, of the 529 responses in January, over six in 10 (61 per cent) of engineering services firms say their material costs increased during the final three months of 2016 and almost four in 10 (39 per cent) said that labour costs had also increased during the same period.

Furthermore, almost six in 10 businesses (57 per cent) said that they were not being paid within 30 days for public sector work, in breach of legislation.

ECA chief executive Steve Bratt and BESA chief executive Paul McLaughlin said: “These new survey findings show that the engineering services sector is powering forward, despite challenges from rising material and labour costs. Our sector is extremely resilient and technological advances are continually opening up new business opportunities.”

The study found the outlook in the sector, which covers work ranging from electrical, mechanical, renewables, heating and ventilating, datacomms, and fire and security systems, remains positive for the first quarter of 2017 with almost nine in 10 businesses (86 per cent) expecting their turnover to increase or stay the same.

“This is the first time that SELECT members have participated in the business survey and we are encouraged at the confidence in future workload opportunities,” said SELECT managing director Newell McGuiness.

“However, this is tempered a little by the increase in material costs, which are beginning to be felt and the on-going issue of extended payment periods, particularly in the private commercial sector”.

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