Before I begin, it is important that I preface what is about to follow by saying that I am a huge fan of The Construction Index web portal. I read it pretty much every day. I have known David Taylor, the author of the article I am about to mention, (which you can read here) for 20+ years. He is a journalist that I admire and respect. Furthermore, the introductory paragraph and much of what follows is factually correct.
Why I have chosen to pick it apart, however, is because the article – well-researched and constructed though it may be – fails to grasp the nuances of the UK demolition industry.
The article begins with the headline: “Demolition contractors win more work… but make less money”. Now that may or may not be true. But the evidence used to support that contention are based upon an industry elite that is utterly unrepresentative of the demolition sector; a sector for whom the vast majority a multi-million pound turnover is an aspiration rather than a day-to-day reality.
To support the argument that profits have fallen, Taylor cites Keltbray as an example, describing them as the “dominant player in the market”. I would suggest that there is a huge difference between a big company that does demolition and a big demolition company. The Keltbray of today is multi-faceted; it has its fingers in countless pies. To describe Keltbray as a demolition company is like describing tech giant Apple as a watchmaker. Furthermore, there is nothing within the reported figures that suggests that the demolition portion of the business has been especially hard hit by the COVID/Brexit double whammy.
The Construction Index article then points to Erith Contractors. The company saw a rise in both turnover and pre-tax profit for the most recent recording period, thereby undermining the notion that all demolition contractors were working harder for less.
Brown and Mason has slipped down The Construction Index league table. But that too is explained by changes within the company’s corporate set-up.
Cantillon also gets a mention, but mostly to say that its turnover remained largely unchanged but that profits were up. And DSM – widely regarded as the industry’s most profitable company – reported the biggest profit – £11 million on a £38.5 million turnover, a margin of almost 29 percent.
In addition to my issues with what the article says, I have perhaps larger issues with what it doesn’t say or, rather, who it doesn’t mention.
Basing an article and a semi-misleading headline upon a scroll through the financial records of the sector’s biggest players is akin to suggesting that the Premier League is representative of all of football. And, like in the world of football, this could not be further from the truth.
For every Erith, there is a dozen or more demolition companies that are never likely to trouble the top of the league but which get by just nicely thank you. Equally, for every DSM, there is another dozen small demolition companies that are struggling to make ends meet and that hover on the very brink of failure.
Either way, the financial fortunes of those at the very top are not representative of the wider sector. The players, coaching staff and the owners at Sutton United might look admiringly at Premier League-winning Manchester City. But the two clubs exist in different worlds and within parallel universes.
According to our last run-down, there are around 550 demolition companies in the UK. Of those, only a small portion will enjoy a turnover measured in the millions. For most in the industry, a multi-million turnover and a double-digit profit margin remains as attainable as a Wembley cup final. That makes them no less valid. In fact, it is the smaller companies – the Southend United of the sector – that are the majority.
