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Construction in UK Predicted to Overcome Supply Chain Hurdles in 2014

Construction firms should expect a buoyant 2014, but the first half of the year is likely to remain tough for main contractors as the supply chain dictates terms, analyst KPMG has said.

In a market forecast for the New Year, Richard Threlfall, KPMG's head of infrastructure, building and construction, said higher GDP projections of 1.4 percent for this year and 2.4 percent for 2014 were indicative of the pace at which the recovery was accelerating and that the promise of a sustained uplift in the economy would drive growth across construction.

However, Threlfall had a warning for main contractors: "We predict the first half of the year will be tough, not because demand will be slow but because it will pick up too quickly for an industry which has lost 20 percent of its capacity over the last five years and where consequently the supply chain is weak.

"At the moment we are observing shortages of bricks, blocks, timber, and aggregates and also of skilled labor across the sector.

"More capacity in the supply chain will be opening up every day, but it will be the second half of the year at the earliest before supply catches up with demand.

"Until then the power will remain with the supply chain. Tier 1 contractors will continue to feel the squeeze, particularly those who chased volume during the recession and were left with wafer-thin margins."

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