THE MONTH
Merchants benefit from Covid-19 banking help
Construction maintains decline through May
Independent builders merchants have made use of the help available in the wake of the Covid-19 disruption.
County Building Supplies in Malvern, 80% of whose sales are to trade account customers has secured a £600,000 loan from Lloyds Bank to help ease cash flow pressures as part of the Coronavirus Business Interruption Loan Scheme. The company has kept its 14 sites open through the lockdown, only furloughing staff with underlying medical conditions. The rest are getting two extra days’ holiday in recognition of their additonal workloads.
Martyn Rees, managing director, said: “The industry is starting to get back up to speed following weeks of disruption, which will create cash flow pressures through the supply chain. The finance provided helps protect our fantastic workforce. They’ve put a great deal of their own lives into our business, and we’re glad that Lloyds Bank can help us in protecting their livelihoods.”
Meanwhile, independent Lincolnshire and Nottinghamshire merchant Turnbull & Co secured help from HSBC UK to manage supplier payments and business liquidity during the pandemic. The funding has not only supported the 125 yer old business in continuing to maintain supplier payments but also supported its 200-strong workforce. Gary Hopkins, managing director said: “It’s very important for industries such as ours to receive support during this time and we are grateful to HSBC UK for the additional facility, which has provided reassurance to our business during the lockdown period.”
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UK construction companies saw a sustained downturn in activity during May, although the pace of decline was less fierce than it had been in April, reflecting a gradual reopening of sites as lockdown measures were eased in England. At 28.9 in May, the headline seasonally adjusted IHS Markit/ CIPS UK Construction Total Activity Index picked up from 8.2 in April, but was the second-lowest since February 2009. Any figure below 50.0 indicates an overall decline in output. Around 64% of the survey panel saw lower construction activity during May, while only 21% saw growth and this was mostly attributed to a limited return to work on site following the shutdowns in April. Among the issues contributing to the decline were furloughed staff
BMF welcomes Government’ trade credit The Government has announced
Trade Credit Insurance will receive up to £10 billion of government guarantees, a move that has been welcomed by John Newcomb, Chief Executive of the Builders Merchants Federation, who is Chair of the Insurance and Surety Working Group for CLC Covid-19 Task Force.
The Trade Credit Reinsurance scheme, which has been agreed following extensive discussions with the insurance sector, will see
across the supply chain, prolonged business closures in other parts of the economy and disruptions from social distancing measures on existing projects. Residential work was the most resilient category in May (index at 30.9), followed by civil engineering (28.6). Commercial building also fell at a slower pace but was still the worst performing area (26.2).
May data also showed a rapid drop in new orders, which was almost exclusively attributed to
the vast majority of Trade Credit Insurance coverage maintained across the UK. Businesses do not need to apply directly to this scheme, as support will be administered directly between the Government and insurers. The scheme is available on a temporary basis for nine months, backdated to 1 April 2020, and running until 31 December 2020, with the potential for extension if required. It will be followed by a joint BEIS/HMT-led review of the Trade Credit Insurance market to ensure it can continue to support businesses in future.
Business Secretary of State Alok Sharma said: “Trade Credit Insurance is a daily necessity
the COVID-19 pandemic. There was a sharp decline in demand for new construction projects and widespread reports that redundancies would have been far more severe without the use of the government’s jobs retention
scheme.Supply chain disruptions have not helped, with lead times for materials extending rapidly. Looking ahead, construction companies remain downbeat about their prospects for the next 12 months.
Tim Moore, Economics Director at IHS Markit, which compiles the survey said: “A gradual restart of work on site helped to alleviate the downturn in total UK construction output during May, but the latest survey highlighted that ongoing business closures and disruptions across the supply chain held back the extent of recovery. It seems likely that construction activity will rebound in the near- term, as adaptations to social distancing measures become more widespread.”
for hundreds of thousands of businesses across the UK. Our £10 billion guarantee gives peace of mind to businesses, allowing them to continue to trade and maintaining liquidity in supply chains. This reinsurance scheme is an important step as we set about firing up our economy to emerge from the pandemic.” Newcomb said: “The construction industry is one of the largest users of trade credit insurance. Trade credit insurance gives builders’ merchants the confidence to trade freely with SME building firms. This guarantee will keep cash flowing through the building materials supply chain and protect thousands of jobs.”
Bradfords Wins Four Year Framework Agreement
Bradfords has been awarded a place on the Sanctuary Housing Group framework, as part of a four-year contract to supply plumbing and building materials in the South West, one of only two
merchants given a spot. Sanctuary Housing Group manages more than 11,500 households across 12 counties in the South West. As part of the framework agreement, the Bradfords Partnerships team will
work closely with the Sanctuary teams and Bradfords branches to ensure the right materials are available for the association’s service delivery for its clients, residents and other stakeholders.
www.buildersmerchantsjournal.net June 2020
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