Construction Material Suppliers Welcome Minister’s Concern

Industry groups representing the majority of companies who supply materials into the NorthernIreland construction industry have warmly welcomed the support and concern that FinanceMinister, Sammy Wilson, has shown over the need for prompt and fair payment of subcontractorsand suppliers in the construction industry supply chain.

The Industry groups – comprisingthe Quarry Products AssociationNI, Glass and Glazing Federation,Wood NI and the Hire AssociationEurope have met with theMinister to inform him directlyabout what is happening in theconstruction supply chain atpresent. Gordon Best, Regional Director ofQPANI, and a member of thedelegation meeting the Ministersaid: “Construction materialssuppliers need protection inPublic Contracts. “We welcome the ProcurementBoard’s endorsement of theProcurement Guidance Note(PGN) on Contract ManagementProcedures and Principles whichincorporates a protocol formanaging poor contractorperformance. “The current operatingenvironment has created asituation where Contractor, Sub-Contractor payments and in turnpayments into supplier base aretoo slow. In fact the reality is inmany cases the lower levels ofthe supply chain act as the“bank”. “As contractors continue to winwork at less than cost, then screwdown the supply chain, funding ofmost subcontractors and sub-subcontractors comes from thematerial suppliers, as the bankshave reduced or removed allcredit facilities. Material supplierscannot sustain this and 2012 willsee a real tightening in creditlimits due to lack of confidence inthe NI construction market andsupport from banks. “As suppliers into the constructionsupply chain we were veryencouraged by the Minister’sstatement in the Assembly backin January with reference to the‘payment of subcontractors’. “The Minister’s statementhighlighted the fact that poorpayment practice is notsustainable economically and thatcontinued failure to paysubcontractors, who are generallySMEs and who will be key agentsin the resurgence of the economy,will not be tolerated. “We are pleased to hear thatpersistent failure to paysubcontractors will be regardedas poor performance and this willtrigger the poor performanceprotocol that could end in theissue of a Certificate ofUnsatisfactory Performance. “We are grateful to the Minister forthe concern and support he hasshown and we are lookingforward to informing him directlyas to what suppliers areexperiencing at present. “As suppliers we want to makeclear that this meeting with theMinister is purely about the lack ofresponsible payment practices bysome main contractors, notGovernment Departments, who we are pleased to say, based onfeedback from our members, arepaying main contractors in goodtime and within targets.” Mr Best added: “Constructionsuppliers believe that the route ofmany of the problems beingexperienced within theconstruction supply chain is sub-economic tendering. We areencouraged that the Minister isleading the way on this issue andwe would commend theProcurement Board, which theMinister Chairs, for including intheir Strategic Plan 2011-2014 akey objective to use publicprocurement to support economicgrowth in Northern Ireland andwhich includes provision

As contractors continue to win work at less than cost, then screw down the supply chain, funding ofmost sub-contractors and sub-subcontractors comesfrom the material suppliers, as the banks have reducedor removed all credit facilities. Material suppliers cannot sustain this and 2012 will see a real tightening in credit limits due to lack of confidence in the NI construction market and support from banks.