Contractors Face Business Viability Fears Amid Inflationary Pressures, says NFRC

RESPONSES from roofing and cladding contractors reveal that 71% feel the survival of their business is being threatened by price inflation and soaring costs, according to the State of the Roofing Industry survey Q2 report.

The latest survey from the National Federation of Roofing Contractors (NFRC) and Glenigan found roofing businesses are now forced to spend more on materials, labour and energy, and clients are tightening their purse strings. NFRC is calling on the government to work with the industry to ease the burden.

Construction Businesses Major Victims of Inflation

The survey indicates that contractors are raising the price of their work – 81% have put their prices up since the same time last year. Firms say that they can only offer fixed prices to clients for a short period of time, as if they wait too long to get started, the roofer’s costs will already have risen significantly.

Construction businesses have been major victims of inflation as construction product prices in May 2022 were on average 27.2% higher than in May 2021. A range of factors have contributed: raw material costs are up, and the energy they use to make their products is now much more expensive. Also, HGV driver shortages and an increase in the cost of international shipping, have added to the cost of getting materials delivered.

The cost of labour is also on the up. More than two thirds (68%) of firms said they were spending more on their workforce than a year ago.

Many firms can no longer absorb these costs, and contractors risk making a loss if they don’t put prices up. The price of roofing work was increased by 69% of companies in the last quarter.

Open Conversation About Prices

NFRC is advising clients and businesses alike to have an open conversation about prices and these challenges. A roofing contractor may not be able to offer the same price as a month ago, because supply chain costs have swallowed up the original profit.

The trade body is urging the government to offer support to businesses on energy costs. Respondents to the survey noted rising fuel prices as a common cause for concern. Not only does it cost more to fill up the van, soaring fuel prices have increased expense at every stage of the supply chain—from manufacturing goods, to transportation, to the power needed for installation on site. In the end, this means the client pays more or the contractor loses money.

Reducing VAT on roof work would make it cheaper for homeowners, as several companies noted in their response to the State of the Roofing Industry survey. This has already been introduced on solar panels and insulation, but not for larger renovation projects.

James Talman, CEO NFRC

James Talman, NFRC CEO, said: “Whilst workloads grew in Q2, we may see this begin to level out in the second half of 2022, as client purse strings tighten. Businesses are facing inflationary pressures that force them to raise costs, and roofing and cladding firms are dealing with rising material prices, skills shortages, and expensive fuel, in an industry where cashflow is already a notorious problem for many businesses.

“All this comes before the impact of the major uplift of gas prices in the autumn. The construction industry showed real collaboration during the pandemic—the industry needs to continue to display that in overcoming this challenge, especially for those who can least afford it.”

Glenigan Economic Director, Allan Wilen

Allan Wilén, Economics Director at Glenigan added: “Overall roofing contractors’ workload continued to increase during the second quarter. Although contractors anticipate further rise in industry workload over the next 12 months, a stabilisation in new enquiries points to a slowing in the pace of growth. The squeeze on household incomes appears to have cooled domestic RM&I workload and enquiries. In contrast commercial and public non-residential prospects remain strong.”

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