No deal Brexit thinking

We are building contractors delivering projects from £1,000.00 to £20m from 4 offices in Bristol, Swindon, Oxford and Guildford. We employ just over 300 people directly and have a turnover of £150m/annum, a strong balance sheet including significant level of cash and are consistently profitable.

We see Brexit risks falling into four categories:

Loss of confidence within business community including key customers

We anticipate leading up to Brexit and potentially afterwards, customers will be more cautious about committing to high value, long term projects. We are mitigating this risk by:

  1. Ensuring we have a good spread of customers and project opportunities.
  2. Only bidding for projects that have a well thought through co-ordinated design, solid cost plan and strong customer commitment to proceed with project.
  3. Proposing solutions that are good value for money.

Rising material costs due to falling pound and/or imposition of terms on imported materials and components

This is a relatively unknown area, which is largely dependent on the final Brexit deal and foreign exchange market reaction to the deal. However, we expect any rise in costs to be less than those felt after the referendum result of 23 June 2016, when the pound fell by 15%. We are mitigating this rise by:

  1. Discussing with supply chain elements of imported materials within their package.
  2. Substituting with UK based materials where possible. As a live example, on one of our Bristol projects, we have recently substituted glazing manufactured on the continent with a UK product to mitigate programme risk.
  3. Working with suppliers who understand the risks they are taking on.
  4. Discussing risks with our customers and providing mitigating options within our bids where appropriate.

Shortage of suitably skilled labour:

Lack of training of new workers, an ageing workforce and poor productivity over the last 20 years has led to the construction industry utilising immigrant labour increasingly widely. There are indicators the flow of immigrant labour is decreasing and may be turning negative; this is leading to increasing labour shortages. We are mitigating this risk by:

  1. Working hard to remain the employer of choice in our sectors and geographical trading areas. We have been accredited IIP gold since and are currently working towards IIP Health and Wellbeing accreditation. This has helped our Bristol office attract and retain 34 people over the past 24 months.
  2. Working hard to remain customer of choice for our supply chain; including paying our bills more rapidly than all the top 30 tier 1 contractors in the UK, ensuring our sites are safe, well organised and efficient and treating everyone with which we work with respect.
  3. Opening up our training programme to key suppliers.
  4. Encouraging off site fabrication where possible.

Cessation of frictionless trade with European Union.

We are working on the possibility that materials or components could be held up at UK ports for up to 5 days. However, none of the materials or components we or our supply chain use are perishable. There is little information on how customs will work post-Brexit and this void of knowledge is causing us concern. We are mitigating this risk by:

  1. Trying to understand more fully how various products we use are sourced and manufactured.
  2. Substituting with UK based materials where possible.
  3. Working with suppliers who understand the risks they are taking on.
  4. Discussing risks with our customers and providing mitigating options within our bids where appropriate.
  5. Early procurement of foreign goods to allow for longer clearance through customs.

 

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