Manufacturing and construction insolvencies reach 10,000 mark

Posted on 15 Oct 2012

There have been 10,172 insolvencies in construction and manufacturing since Q3 2010, PwC figures revealed.

The two sectors saw a fall in the last two quarters. In Q3 of 2012 there were 4% fewer insolvencies in construction than the previous quarter, and Q2 was nearly 16% better than Q1.

Jonathan Hook, PwC’s engineering & construction leader, said:  “Whilst there has been a decline in the number of insolvencies over the last two quarters the industry remains under severe pricing and cash flow pressure. I anticipate further failures in the supply chain over the winter period with the first quarter of next year being the peak point for failures in the sector.”

Of the 6,179 construction insolvencies since Q3 2010, about 30% were general construction and civil engineering firms, with the remainder made up of architectural, building, water projects, painting, roofing and plastering.

Over two years manufacturing has seen nearly 4,000 insolvencies but Q3 saw 9.3% fewer than Q2. Of the 3,993 manufacturing insolvencies in the UK since Q3 2010, 1,142 have been from industrial manufacturing with the remainder including aerospace & defence, automotive, chemicals, metals and parts of transport and logistics.

Philip Hines, PwC deals & industrial products partner, said: “The reduction in manufacturing insolvencies is encouraging but with rising raw material costs and no imminent signs of a material economic recovery, the outlook remains tough for those companies already experiencing financial stress.”

Overall the number of insolvencies in Q3 2012, across all industry sectors, fell 18% compared with the last quarter, with only the transport sector seeing a quarterly increase.

There were 3,296 incidences of insolvency across the UK in Q3 2012 compared to 4,045 in Q3 2011 resulting in a 19% decrease.

According to PwC, the slight reprieve in figures may not signal a long term improvement with the same pressures continuing through to 2013.