One in ten m&e firms face financial crisis

A recent report into the UK m&e contracting market rates 115 of the UK’s leading 1000 m&e contracting firms as being in financial danger.

Amid calls for bail-outs and emergency measures, David Pattison, a senior analyst at report collator Plimsoll, asked controversially whether we should “just let them fail.”

Pattison said: “There is no doubt in my mind that recessions catch bad businesses out. Those companies that have entered this period ill-prepared have placed themselves at a distinct disadvantage. Many have grown used to running their businesses on high risk business models, propped up largely on finance."

Of the 115 firms rated as Danger, the report shows:

• 56 increased their debts last year;
• 78 saw profits fall last year and 68 are losing money. Their costs are clearly ahead of sales and they have failed to respond to changes in their business structure;
• 56 managed to increase sales last year – some would argue an enviable task. It only proves, however, that despite their rising debts and mounting losses they have been desperate to maintain sales at any cost.

The UK m&e contracting industry is not immune to the current economic crisis, claims the report. The sector has overcapacity, 30% of businesses suffered a fall in sales last year, with competitive pressure forcing many to see sales fall by 13%.

The 2009 edition of the Plimsoll analysis – m&e contractors includes an analysis of each of the industry’s largest 1000 companies. Copies are available for £350 by contacting Clair Sherwood on 01642 626400.