It’s been a month of big news for the healthcare construction sector, and those in the industry are waiting to see the effect on everything from the cost of finance to the supply of skilled labour, raw material prices, and government funding allocations.
The devastating collapse of ISG, one of the UK’s biggest healthcare construction contractors, has dominated headlines and will affect everyone from workers to supply chain partners. We’ve also had the Bank of England’s decision to hold interest rates at 5% – though with strong indications this will fall – and the Federal Reserve carving 50 basis points off the US rate.
Meanwhile, ONS jobs data shows a somewhat flabby UK employment market that might worry those hoping for signs of growth – but may avoid upward pressure on wages.
On a somewhat smaller scale, our own Access Group – home to construction ERP Access Coins, plus a suite of other construction and healthcare systems – released new figures from its construction industry user base, revealing encouraging green shoots.
When goods move quickly through the supply chain, firms can order little and often, taking pressure off operating budgets
Briefly, those reports show average order values were up 17.5% in Q2 among construction suppliers, according to the CRM platform Prospect.
We’re seeing profit margins amongst construction suppliers recovering too – up 12% for the most recent fiscal year, according to inventory platform Unleashed. In fact, out of the 12 manufacturing categories analysed, construction was one of only five to see a year-on-year uplift in performance. The industry average was down 9% over the same period.
Meanwhile, lead times in the industry are also the lowest they’ve been in four years. Those lead time figures (down more than 40%, to an average of 14 days) are welcome news for any firms holding their own stock.
When goods move quickly through the supply chain, firms can order little and often, taking pressure off operating budgets. More generally though the reason healthcare construction firms can celebrate short lead times is they signal an end – for now at least – to the supply constraints that so dramatically overheated the cost of raw materials.
The message amongst the data appears to be that, yes, confidence is returning, but that care and caution will remain watchwords for the remainder of the year
So there are positive signs – but there’s no room for complacency either.
As reported in this publication, firms supplying the construction sector saw sales revenue drop 43% in Q2 2024, while sales in the manufacturing industry as a whole fell 22%.
The message amongst the data appears to be that, yes, confidence is returning, but that care and caution will remain watchwords for the remainder of the year.
Following the supply chain disruption of the past few years, the industry has become more agile and innovative
It’s the kind of environment that makes access to good data more valuable than ever. Certainly, as software providers to the sector we think there’s a big future in providing the kind of clarity the construction industry wants.
Following the supply chain disruption of the past few years, the industry has become more agile and innovative – and a lot of that is down to better business intelligence, which improves decision-making.
After all, the more accurately construction firms can manage their own financial performance, monitor changes, and react to the market, the more efficient – and confident – the industry as a whole will be.
