Market report dismissed as scaremongering now proving horribly accurate.
Every few years, market research specialists Plimsoll Portfolio Analysis turns its all-seeing spotlight onto the UK demolition market to produce a detailed report on the prospects for the country’s 800+ contractors. And each time, the launch of the report is accompanied by doom-laden headlines of the type that make us all want to pack up and go home.
Back in July 2009, the company’s report said that 255 UK demolition companies were aggressively chasing sales at the expense of prudence; that 251 companies were in financial difficulty and would struggle to survive; and that competitive pressure was so intense that a third of demolition companies were running at a loss.
At the time, many dismissed the findings of the report as a form of scaremongering designed purely to encourage UK demolition contractors to part with the £300+ to find out what the report said about their company. Indeed, we will readily admit that we were slightly dismissive of the report which claims to analyse almost 800 contractors when our statistics suggest that there are only around 500 genuine demolition companies operating in this country.
But with the collapse of Controlled Group last year and Armoury Demolition at the beginning of this, the foreboding laid out in that report almost two years ago is beginning to look worryingly accurate. Indeed, if feedback to DemolitionNews is anything to go by, the demise of Armoury may yet prove to be the first of many.
Back in July last year when we exclusively reported on the failure of Controlled Group, our mailbag was fit to bursting with emails saying how sad it was that such a well-established company should fail. Regardless of the circumstances, Controlled Group’s demise was met with a mixture of surprise and sadness.
How the industry landscape has changed. Since we first indicated that all was not well at Armoury, our telephone and email inbox has been an almost constant source of doom and gloom with many predicting that there are “many more“ demolition companies teetering on the very brink of the economic precipice. And in addition to being the busiest ever day at our sister website demolition-jobs.co.uk, yesterday’s search terms here on DemolitionNews.com are equally telling. The most common search term bringing readers to the site, not surprisingly, was Armoury Demolition; second was demolition + administration; third was demolition + receivership.
Equally worrying is that there is no obvious end in sight. There are no more 2012 Olympics to ride to the rescue of an ailing industry; no promise of a post-election feel-good factor to sweep away the debt of the previous government; no promise of a drop in the VAT rate to restore consumer confidence.
Yet that, potentially, is just the tip of the iceberg. If, as some have suggested, the collapse of Armoury was caused in part by the sudden and unexpected withdrawal of bank lines of finance, a worrying precedent has been set. Based upon recent experience, it is plain to see that no-one in the field of commercial banking has ever been guilty of an original thought; they merely follow the herd. And if Armoury’s bankers have hit the panic button and pulled the plug, they may have triggered a chain of events that could shake this industry of ours to its very foundations.
What are your feelings on the short-term outlook for the UK demolition market? Please click here and pop over to our Forum and let us have your thoughts.
