Rising prices leave Scottish contractors behind schedule

Following the abnormally high inflation rates and cost of living in 2022, the construction industry saw production levels grind to a halt.

Record high prices for raw materials, increased shipping costs, and supply chain issues created a situation in which starting new building projects was harder than ever.

One of the affected contractors was TSL Contractors LTD, a Scottish company based in Craignure on the Isle of Mull. From their Inner Hebrides home, the company has been operating for over 35 years.

TSL will soon build a new estate in Craignure, which includes a nursery, retirement home, retail unit and 90 homes.

Its head of business development, Naomi Knight, described her company as struggling with starting work on the new estate.

She said: “Given the inflation rate, it’s looking quite tight for us making a profit on it. By waiting for things to maybe settle a bit and inflation and interest rates to drop, then maybe things might look a bit better.”

Private sector problems

The Royal Bank of Scotland’s PMI data shows that private sector spending has been falling for seven months. People simply do not have enough disposable income to buy property thanks to the cost-of-living crisis.

New orders and business activity are on a downward slope. The work is drying up and because of that the entire housing market has slowed down.

This has also happened to TSL, as currently workers are being sent away from their homes on Mull to work on the mainland. It’s a result of the estate the company wishes to build waiting in limbo while supply and bureaucratic issues are solved.

These issues are being seen nationwide, not just in TSL’s main area of operation in the north-western regions.

In the central belt, Paisley-based company Clark Contracts cited supply chain issues as a major reason for numerous delays.

In a statement, the company said that it was continuing to “wade through” the issues with raw material costs. Despite these issues, gross revenue for Clark Contracts hit £100m for the year to October 2022.

But not everyone is managing so well.

As Mrs Knight said: “Basically all construction businesses seem to be in the same position.”

Business sentiment in Scotland is the third lowest out of the UK’s 12 monitored areas, and construction has not abstained.

With inflation finally on a downward trend and TSL hopeful that work on its new estate will still begin by the end of 2023, perhaps that can change.