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Water firms will pay price for squeezing suppliers warns Emery

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CONTRACTORS AND consultants will turn their backs on water companies if margins keep getting squeezed, a senior offi cial at water regulator Ofwat warned this week.

Water companies should instead work to improve their relationships with their suppliers, said Ofwat director of costs and performance Bill Emery.

Emery warned that squeezing suppliers' profi s too hard will force them to cut training, leading to skills shortages.

'There are clearly issues over how to ensure a sustainable skills base. In the long term the business is not developing its level of resources through to 2015-2025. If companies squeeze profi ts down too much there will be implications for the supply base, ' he said.

Contractor and supplier representative body British Water fi st voiced these concerns to NCE last year (NCE 9 December 2004).

But industry body Water UK says that there is not a problem.

'Companies need to be able to resource their investment programmes moving forward.

There are tough negotiations but (the water companies) are working well with suppliers.'

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