Angus firm Pert Bruce has invested £500,000 on construction materials over concerns spiralling prices will wipe out its profits.
The Montrose construction firm said a “perfect storm” of global problems has led to the price of timber and steel rocketing.
The increase in costs has hit margins at the long-established business, which counts the former Sunnyside Hospital among its current housing developments.
Managing director Craig Bruce said he had stocked up on materials now in case prices rise further.
“I can be positive about workload but not on material costs,” he said.
“There has been a 120% price increase on timber 100% increase in steel.
“I’ve bought nearly £500,000 of materials to hedge off contracts we’ve already priced this year.
“We are enter into contracts that don’t have fluctuation contracts and the costs could potentially wipe out margins on jobs. We are seeing a lot of upward movement and inflation in general.”
Why has the cost of materials risen?
Factories shutting during the first lockdown combined with a boom in activity once lockdown ended has caused problems.
Shipping issues, including the Suez Canal blockage and dramatic rises in container costs, have exacerbated the issue.
Perthshire firm Gillies & Mackay has asked customers to voluntarily pay more for timber sheds that have been ordered.
Mr Bruce said his company had stocked up on timber, steel, cement and plasterboard.
Among its jobs is constructing the operations and maintenance base for the Seagreen offshore wind farm at Port of Montrose.
“It’s been a perfect storm of problems, but there has been profiteering as well,” he added.
“In England the construction market kept going during our first lockdown and that used a lot of stocks.
“Housebuilders can pass on their costs because they can raise prices.
“In the construction market we’re pricing a job that’s four months out to start and it can be a year of work.”
Accounts show Covid impact on Pert Bruce
Newly filed accounts show the financial impact of Covid-19 on Pert Bruce, which is 150 years old.
Turnover fell to £7.4 million for the year ending October 31, compared to £11.6m in 2019. Pre-tax profits were £98,000 against £266,000 in 2019.
Mr Bruce said the company had remained strong despite recording no revenue for six months.
He said the furlough scheme had saved the firm, which has around 80 employees, from making any job reductions.
During the challenging period, the company continued to invest, making a major purchase of 98 acres in Glasgow.
The housing development at the former Sunnyside Hospital has also moved forward, with 30 units completed for Hillcrest and private buyers in the past year. A further 85 units sold are to be built.
Mr Bruce added: “Pert-Bruce’s performance over the past year is characterised by the resolve and expertise of our staff and supply chain.
“I would like to express my thanks and admiration to them all.
“There are still very large challenges in the market.
“But we remain committed to the changes necessary to maintain our business, keep our staff employed, service our clients and lead a more productive, safe and resilient construction company into the future.”