Eric Wright Construction has warned that booming high-rise construction in Manchester is over-heating the regional market .
Construction managing director John Wilson highlighted the problem of soaring pay rates and deepening skills shortages in the region as the Lancashire firm suffered a loss for the second year running.
These losses were mainly down to the late running of two PFI extra care home projects secured in 2014.
But the depth of the builder’s problems on the fixed-price jobs had been exacerbated by shortages of key trades like plasterers and bricklayers as competition grew for skilled trades.
Now Eric Wright is controlling its exposure to the residential sector in Manchester and Salford where firm’s like Carillion have secured large pipelines of work.
Wilson said: “Increases in work opportunities, especially in the residential sector, have led to a major skills shortage and price increases.
“The current glut of high-rise apartments being built mainly in Manchester provides a market place where all main contractors are vying for the same labour resource.
“While we are confident in our abilit to deliver residential projects our strategy is not to over expose the business to this sector.”
He added that salaries of technical staff had increased way beyond inflation.
In 2016, the firm’s revenue rose 8% to close to £120m, but delays delivering the two fixed-price extra care homes saw a loss of £1.4m, after a £2m loss in 2015.
This two-year period is the first time Eric Wright Construction has suffered a loss in its history.
Wilson said: “Having completed the legacy problem contracts, the company expects a much improved financial outcome for 2017 on a reduced turnover of around £100m.”
He added that negotiated contracts with Chorley Council, the continuation of ManchesterLife schemes and work generated through its relationship with regeneration specialist Muse, including a £25m student scheme in Lancaster allowed the firm the luxury of being more selective when bidding in 2017.
Over the year Eric Wright Construction’s headcount remained stable at around 168. The highest paid director saw pay and benefits rise 9.5% to £133,566.
During the year £100,000 was paid out to two directors who resigned.
Source: Construction Enquirer
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