This year’s NCE Contractors File - published today online - presents a somewhat confusing message for an industry reputedly in recession, finding contractors reporting record turnover of £16.4bn and record order books of £24.7bn – and looking positively to the future.
Total civils turnover reported last year was another record high of £16.4bn – up almost £3bn on the previous year alone. Less than two out of 10 are expecting to see their turnover fluctuate by more than 20% – and to put that in context, such a fall would merely represent a return to 2007 levels.
Combined order books of the 144 firms surveyed this year stand at £24.7bn – up almost £5bn on last year. In the history of the Contractors File, order books have never been fuller.
Fewer than two out of 10 firms are expecting staff numbers to change by more than 10% in the next two years, with only 4% expecting a cull of 30% or more.
The expectation of work is there, making the issue more one of delivery. And with a big, big chunk of that £24.7bn coming from government, there is a big incentive in making sure spending commitments are adhered to.
Schemes like Crossrail are undoubtedly key to a healthy future for civils contractors, but it is far from being the only show in town. In fact, when it comes to looking for growth areas, energy gets more votes than any other sector. Almost half of all contractors surveyed are expecting growth in energy in the next two years, a massive increase on the 36% who foresaw the energy sector as growing last year.
Last year’s golden goose – waste – remains popular with 25% of contractors expecting growth there, but this is nevertheless a marked drop on the 47% predicting growth last year. Confidence in all other sectors is down a little on last year with 22% expecting growth in rail compared with 29% last year and 27% of firms expecting growth in roads compared to 28% last year. In rail, a severe tightening of Network Rail’s supply chain has undoubtedly been more of a factor than recessionary fears.
Perhaps the biggest surprising is that relatively few – less than 5% - of firms are expecting growth in tunnelling work, but that may be more to do with the specialist nature of the sector than overly-glooming thinking on Crossrail.
The Top 10
Of the £16.4bn earned overall, £13.6bn went to the top 20 firms – a massive 83%. Indeed, £7.9bn of it went to the top five, and Balfour Beatty and Laing O’Rourke divvied up £4.7bn of it just between themselves.
These two heavyweights stay streets ahead of their nearest challengers, Amey and Galliford Try, and both had a great year – growing civils turnover by 11% and 19% respectively. And despite the doom and gloom, both have positively rude order books of £4bn and £5.9bn respectively.
But it is not just the big two that are well poised. Costain is sitting on £2.1bn of forward orders, Galliford Try £1.7bn, Morgan Est £1.5bn and BAM Nuttall £1bn. In total, the top 20 firms have £22bn of work lined up.
As for relative performance, Morgan Est has edged ahead of BAM Nuttall to maintain sixth place in the only real change in the top 10 aside from Amey’s new entry into third (it did not submit figures last year).
The sector bullies
When it comes to a sector-by-sector analysis, the big surprise is that Balfour Beatty and Laing O’Rourke don’t top more tables. In the case of Laing O’Rourke the answer is simple – it did not provide a breakdown of where it works. But for Balfour Beatty it is more to do with the strength of competition in the specialist sectors.
In airports, Morgan Est takes top spot, just ahead of VolkerFitzpatrick with Balfour Beatty – it had to be there somewhere – third. It’s a similar story in ports, with Kier Group holding top spot ahead of BAM Nuttall with Balfour Beatty again third.
In rail Amey is top dog, a position it is sure to strengthen now it has taken over structures maintenance across Network Rail’s entire network. Balfour Beatty and Carillion are the strong long-term performers in second and third.
In roads Balfour Beatty is top and few can argue with its market-leading position with the firm in action across the motorway and trunk road network. Work on the M1 widening and A3 Hindhead Tunnel is in full-flow, and the firm is just getting going on the big one – the £6.2bn M25 widening. Carillion and Amey take second and third.
Water and waste is a fairly specialist sector, and it sees top spot go to Black & Veatch, with Morgan Est and Galliford Try second and third.
Crossrail is rarely far from the mind and it will be permanently in the forefront of the mind for the top firms in tunnelling – this year’s top spot goes to Morgan Est, fresh from its work on the Docklands Light Railway extension to Woolwich. J Murphy & Sons take second, thanks to its work on London 2012’s cable tunnels, and BAM Nuttall third.
In energy – the emerging sector everyone wants to work in – Balfour Beatty can again claim a valuable market-leading top spot. Skanska edges up to second with Morgan Est third.
Balfour Beatty takes another top spot in flood defence, with Birse Civils – a kind of mini-Balfour Beatty – in second and BAM Nuttall third. Britain’s biggest civils contractor must be content with a second place in buildings, however, with top spot going to Galliford Try. Kier fills out the top three here.