South East: Grant Thornton advises construction firms to find their niche

‘Find your niche and be selective’ is the advice being given to construction firms in the South East, as recently released figures are painting a mixed picture for their future. 

James Stares, southern regional chair of R3, the trade body for insolvency professionals, and director at Grant Thornton in Southampton, said that while various pieces of research indicated a murky outlook, there were signs of recovery on the way.

Recent figures from the Office of National Statistics (ONS) show the volume of construction output to be at its lowest level since 1998. In similarly downbeat news, research by insolvency trade body R3, using Bureau van Dijk’s ‘Fame’ database, shows 30% of construction firms in the South East are at risk of failure in the next 12 months. However, the Q2 2013 ICAEW/GT Business Confidence monitor showed a marked upturn in confidence in the construction industry, climbing to +22.7 from a low of -8.1 in Q3 2012.

Stares said: “It’s certainly a mixed picture at the moment, but I think there is reason for optimism. There has been a marked upturn in confidence in the construction sector as the rest of the economy recovers, and possibly thanks to new government schemes like ‘Help to Buy’.

“Key issues like low margins, companies buying work at losses and late payments have all badly affected the construction companies. They should respond by finding their niche in the market, being selective over their customers and driving as much margin as possible.

“It’s not surprising that the latest research shows construction firms in the South East facing difficulty, but what is important to remember is that even the most distressed of businesses can still turn their fortunes around by seeking advice early on from recovery professionals.

“My advice to any company facing in distress would be to ask for help and ask for it straight away.”