Over a third of firms down to under 3 months cash
Around 35% of construction firms are reporting less than three months’ cash reserves after the pandemic lockdown.
The big squeeze on cash was revealed in the latest industry survey taken by number crunchers at the ONS. Around one in 20 of these firms (5.2%) reported they were walking a tightrope with less than one month’s cash. The Business Impact of Coronavirus Survey received responses from just over 1,700 construction firms, with around a fifth employing more than 250 staff. It was taken in the first two weeks of May. At that time, around 20% of firms surveyed had temporarily stopped trading altogether, with an average of around 42% of staff on furlough. In that period, four out of 10 firms saw revenue more than halved. Since then more staff have returned to work as sites reopen. But there are concerns that many firms may be forced to downsize. Noble Francis, chief economist at the Construction Products Association, said: “Clearly the proportion of staff on furlough will fall as sites reopen but what we don’t know is what happens after the initial flurry of activity to complete halted projects, given the fall in demand and new orders since COVID-19.” Last month Wates became the first national contractor to unveil redundancy plans in response to the coronavirus epidemic. The firm, which had previously furloughed a third of staff, said it had to act to lay off 300 staff to protect the business in the face of falling revenue. Its planned downsize will cut the workforce by around 8%. The cuts will be across the board hitting surveyors, planners and bid teams.