Figures from the Electrical Contractors' Association's (ECA) Q4 2010 Member Business Trends Survey indicate the industry experienced a slow end to the year, with overall figures down on Q3, but suggest businesses with a turnover of more than £5m per year expect to be the ‘winners' in 2011, with 58% optimistic they will see an increase in turnover in the next 12 months.
413 members completed the Q4 survey with 40% reporting their turnover was the same as Q3, while just over 20% saw an increase and 34% a decrease.
The survey indicated growing concern about government cuts in public sector spending and their impact on future construction projects. 40% of ECA members undertake public sector contracts and 67% of this group have experienced a drop in business as a result of the cuts, with 48% describing a ‘substantial' reduction in work.
The prospects for 2011 are no better, with 68% expecting to have fewer public sector contracts than 2010. The West will be hardest hit, with 78% of ECA members anticipating less public sector work in 2011 and firms with sales between £1m-5m expected to suffer most.
ECA chief executive, Steve Bratt, said: "The cuts in public sector spending will have a deep impact across all of the construction affiliated trades during 2011 and the figures from the Q4 survey highlight how damaging they will be. However, the fact that 58% of our larger member companies expect 2011 to be better overall suggests that there are still major projects going ahead elsewhere.
"For the first time, in its Budget for Growth, the government has said it will give incentives to encourage householders and businesses to take part in the Green Deal. We welcome this and look forward to engaging with it to ensure anything offered is meaningful and creates demand with consumers, and in turn fuels confidence on the supply side."
Respondents also revealed the pressures they face in developing their businesses, with 75% agreeing that creditor payment delays were a major problem. "Government must lead the way in ensuring prompt payment," said Bratt. "This will be even more important as the pool of work continues to dry up."
There was some slightly more optimistic news from the survey, with only a third of companies earning less than £200,000 per year reporting difficulty in securing credit and finance.
Bratt concluded: "There is no doubt that times continue to be tough for electrical contracting businesses of all sizes but it seems from our survey that firms with a turnover of £200,000 to £1m appear to be feeling the pinch the most, with 41% expecting a fall in turnover in 2011 (compared to 38% in Q3).
"To help members, the ECA will continue to provide commercial support and advice, and in April will revive our ‘Surviving the Recession' seminars. We will also continue with our successful programme of sustainability roadshows which have already provided practical advice on how contractors can take advantage of emerging business opportunities."
