What follows is a rundown of what to expect in the coming months, which should help you navigate your business through 2023.
Before we start, please note: The following figures are estimates based on current data and is subject to change (January 27th 2023).
Industry Growth
According to Glenigan, the time it takes to complete a project has increased by 23%. This has forced developers to reassess costs and, in some cases, the design of the build.
The same rings true for sole traders and small business owners, who are struggling to source materials, and keep up with labour costs. And it’s the customer who is picking up the tab.
The number of domestic projects scheduled to start in 2023 is predicted to drop 5%. With an increase in mortgage rates, and inflation there is less money in pockets.
Homeowners are downsizing to avoid higher mortgage payments. And this is having a knock-on effect in the industry. The next year will see a reversal of the 2021 boom, which saw customer’s upsizing and investing in home renovation.
Project approvals in the industrial sector increased 59% in 2021, resulting in a massive boom for the industry. Online sales pushed this, as consumers moved away from the high street.
However, a fall in demand and investment into warehouse space will see a drop of 5% in 2023, and dip of 8% in 2024.
Major infrastructure projects continue to keep the engineering sector afloat, and include HS2 and the £3 billion Sofia Wind Farm Expansion. Road improvements across the UK are also planned in the coming months. Forecasts predict civil engineering output will see a 1% increase in 2023 and a 3% increase in 2024.
There has been a lot of controversy surrounded the development of HS2, with spiralling costs and part of the route scrapped. This January, it was announced the project may be scaled back even further, and not reach Central London. The original plan was to end the line in Euston, but this may change.
The recently published report also revealed that the completion date is likely to be 2038. Calls for the project to be cancelled have echoed across the industry. Estimates suggest the money saved ending HS2 will half the UK deficit.
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Starting at £59* per yearLabour & Materials
Data reveals that tradespeople’s biggest concern going into 2023 is the price of materials. Supply chain issues have eased, but demand and production costs continue to impact what materials are available, and how much they cost.
According to the Department for Business Energy & Industrial Strategy (BEIS) there was a 15.5% increase for materials used in all work in October 2022. *
- Gravel, sand, clay & kaolin saw the biggest year on year price jump at 56.7%
- Insulating materials increased 51.2%
- Imported sawn or planed wood dropped 19.9%
- And particle board prices fell 9.7%
Brick prices are also expected to rise further. This will be the fourth time prices have increased in the past 12 months and could see bricklayers charging £650 – £1,500 to lay 1000 common machine made bricks.
Predicted bricklayer rates for other brick types are as followed:
- £950 – £3,900 for handmade bricks
- £2,260 – £5,000 for clay facing bricks
- £650 – £1,790 for engineering bricks (Class A or B)
These estimates will vary depending on the area of the UK and availability.
2023 will see extra support for the steel industry, with British Steel negotiating a £300 million government package to save jobs. As well as another £600 million to help the steel industry transition to lower-emission technology.
In recent years steel prices in the UK have soared well above the European average. And energy intensive manufacturing has suffered due to energy costs.
Energy costs have started to decline, with wholesale prices falling to pre 2020 levels. However, this decrease will take time to trickle through to manufacturing. Government support for businesses will end in April and could force tradespeople to pass increased costs onto their customers.
As a result, labour and material costs across all sectors are fluctuating on a daily basis. This makes it more challenging for tradespeople to give accurate quotes to their customers.
To help, Checkatrade suggest the following. This should save you time and money when you’re quoting or planning for a job:
- Ensure all designs and plans are signed before ordering materials. And be less flexible on revisions.
- Buy commonly used materials in advance, and work with other tradespeople to share materials when you have excess supply.
- Separate the cost of materials and labour on jobs to make it clear to customers where the increased cost is from.
- Provide an estimate instead of a fixed quote, with a caveat that prices may change based on the market rate.
- Put time limits on quotes, or charge the material costs directly to the customer at the time of purchase.
- Schedule longer lead times into jobs.
- Utilise alternate composite or PVC materials where traditional materials are not available.
Again, it’s important to stress the information above is based on current data and follows current trends.
If we’ve learnt anything in the past twelve months, it’s that things move quickly. The good news is the construction industry has proven its resilience in recent years.
Inflation, and rises in material and energy costs, will no doubt prove be a challenge for tradespeople. However, the 2021/2022 boom that swept across the industry helped businesses weather the storm up to this point.
It’s easy to be pessimistic, but with a willingness to adapt, and a positive outlook, half the battle will be won.
Tradesman Talk
What are your predictions for 2023? Have materials costs and lead times impacted your schedule?
As always, leave your thoughts in the comments and click the social links to share this guide.
Until next time, make sure it’s Tradesman Saver.
