Construction News
Construction Insolvencies 'Set To Peak' After 5,580 In Two Years
Many construction companies are finding it tough to carrying out business in the always-competitive business environment. Most construction companies have gone under, either willfully, or due to unavoidable pressure on their operations.
A study by PWC reveals that the number of insolvencies among construction companies is set to be on the rise into the unforeseeable future. The study shows that the number could rise as high as above 5,580 companies becoming insolvent in the next two years.
This is a number that looks too high to be realized, but with 621 insolvencies in the last quarter alone, the number could well be surpassed if the trend continues at the same rate. With the number of construction companies going out of business, the construction industry is headed towards a tough era to continue offering their services to customers.
This high fall-out rate could be attributed to several factors. Topping the list of causes is believed to be the high competition between construction firms within the construction industry. New firms are unable to match the strong competitive force put forth by already established firms that have the advanced facilities, personnel, and market presence.
There is also the continued change in technologies used by construction firms. Most firms are pushed into adopting modern technologies, in terms of machinery and knowledge. These often come at very high costs to the firms.
Most of these firms are unable to meet these financial obligations due to low incomes. These in turn affect negatively on their competitiveness, thus low customer turnout. In the long run, they are pushed out of the market and forced to close down.