Water and Effluent Treatment Magazine
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4 Leaders 2017 The Leaders 2017 Reduced labour drives productivity The Leaders 2017 exclusive Index reveals productivity has risen sharply but the decline in assets continues. market place based on their financial performance between 2011/12 and 2015/16. The Index would seem to indicate that the industry saw a slight decline in sales during the post-2008 downturn, while productivity rose quite sharply, and net assets fell. In other words, the industry was responding to the sales plateau as would be expected: reducing staff, and cutting back on investment. As sales regained momentum around 2013/14, confidence came back and investment re-started, so a sharp rise in assets was seen. Meanwhile the reduced labour force has continued to drive a gain in productivity. What is odd, though, is that the increasing rate of sales growth in the past two years has been accompanied by another decline in assets – unless that reflected a pre-referendum slump in value. It will be interesting to see what this chart looks like a year from now when The Leaders 2018 is compiled. The industry is characterised by sudden and unpredictable changes in sales, profits and trading ratios. This is in large part due to the long-term nature of the business: a company which wins a major contract might expect to then invest heavily in that contract for the next few years (thus depressing profit performance) before reaping the benefits in terms of a profits jump as the contract comes to a conclusion In compiling The Leaders 2017, we have taken the top Tier 1, 2 and 3 contractors and profiled each company in turn, including their accounts for the past three years*. Transition As always, the water sector continues to be dominated by the impact of the five- yearly annual cycle with most contractors now reporting increased workloads as AMP6 finally gets into full swing. Just as well as attention is swi"ly turning towards AMP7, as regulator Ofwat begins to prepare the water companies over what it will expect from them in the next Price Review (PR19). But there appears to be a growing optimism that the slow start to project start-ups in AMP6 will result in a smoother transition to AMP7 in April 2020. Interestingly, some contractors have noticed a general shi" among clients towards moving work out of frameworks and into direct procurement models with Tier 2 contractors, which is reducing the overall anticipated workload across the AMP period. The skills shortage continues to be a problem for contractors, and especially The impact of the skills shortage continues to be a major challenge for contractors working in the water sector "Interestingly, some contractors have noticed a shi among clients towards moving work oit of frameworks and into direct procurement models with Tier 2 contractors" T otal combined contractor sales have continued to rise reaching almost £34bn from £30.8bn. Having seen a dramatic rise in net assets last year, the trend has reversed this time round with a 12% drop to £5.8bn. However, it is the increase in productivity among contractors that is outshining other areas of their financial performance. This is according to The Leaders 2017 Index, and exclusive guide that offers an insight into how the leading civil and process engineering companies serving the UK water sector are performing in what is still a tough and competitive