Irish builders hit by UK rout

Building supply firms are being severely hit through non-payment for services by a fresh wave of insolvencies hitting the UK construction sector.

According to British trade credit insurer Atradius, the first half of 2015 saw a 25% year-on-year rise in trading losses among Irish firms linked with the UK building sector, as insolvencies there increase.

Atradius protects firms from the risks of trading domestically and overseas. The company has paid out nearly €500,000 in claims in the last month.

“Since the construction downturn, many Irish construction companies and suppliers have sought new opportunities in the UK to achieve business growth,” said Stuart Ramsden, Atradius’s country manager for Ireland.

“However, the sharp increase in construction insolvencies has led to a number of Irish companies facing trading losses and left with invoices unpaid.

“Accordingly, Atradius has experienced a large increase in the number of claims payments made to Irish construction companies that trade into the UK.”

While some improvement has been seen in the UK’s construction sector, funding constraints, skills shortages, and rising costs are hindering output growth and 133 building firms went into administration during the first six months of this year.

Major contractors, with combined turnovers of over £650m (€920m), have been forced to call in the administrators since the start of this year.

“Firms are continuing to fail seven years on from the onset of the recession, which is a worrying trend for any supplier,” said Simon Rocket, senior manager for risk services at Atradius.

“Looking forward, the British construction sector has been given a ‘poor’ forecast in Atradius’s latest economic report, with economic weakness continuing to underpin the industry.”

As the main trading partner for Irish businesses, the UK is an obvious key market in which to supply products and services.

“These are challenging times for businesses which are being forced to obtain new contracts on low margins and suffering significant losses which can have a damaging impact on cash- flow and the business as a whole,” said Mr Ramsden.

“In the current environment, companies must be risk-adverse and closely look for the warning signs before they do business.”