North West contractors are yet to see the benefit of the economic upturn, according to the latest survey from Constructionline.
In a survey of 103 regional suppliers, 75% said they have had to lower their rates in order to win work, with 96% claiming that cost is the most important factor to clients when tendering.
At the same time as facing downward pressure on quoted prices, the rising cost of materials was cited as a key issue, with 89% noticing an increase in material prices over the past 12 months. This was identified as one of the biggest cost pressures for a business, coming only behind wages, which was rated top by 70%.
As a result, few of the survey's respondents believed that they are benefiting from the reported upturn in construction sector activity. More than half claimed that they are yet to see the effects trickle down the supply chain.
On a positive note, 54% of respondents said workload was increasing and confirmed projects in the pipeline had increased for 43% of those questioned. In the last quarter, 42% claimed to have recruited new staff.
Neil Thompson, director of Constructionline, said: "On the face of it, inflated order books and an influx in recruitment activity would suggest that the construction industry is once again on the road to recovery.
"But beyond these stats, there is a very different picture. Higher outgoings and lower returns means that conditions still remain incredibly challenging.
"While workloads are indeed improving, the sector's recovery is starting from a very low base after years of decline. Fierce price competition, a legacy of the recession, lingers over the sector's smaller firms while larger firms are finding they still need to hunt at the tail end of the market.
"While the recovery continues to build, it's important that clients remember the risks posed by 'lowest price wins', to place more emphasis on skills, competencies and developing the workforce."
The results represent the opinions of 103 Constructionline members in the North West. Almost half of respondents, 45%, turnover less than £1m annually. The vast majority, 82%, have revenues of less than £5m.