Balancing act: Easing inflation presents a comms challenge for construction
19th October 2023
The worm appears to be turning – albeit slowly – with today’s ONS figures showing a pause in the rate of inflation at 6.7%.
With the Consumer Price Index expected to resume trending downwards next month, new comms challenges are on the horizon for those sectors that have been very public in stressing the challenges of rising input costs over the past the past year.
The construction sector is facing into a particularly acute issue. On the one hand, eight of the 10 largest contractors by revenue have demonstrated growth in recent accounts, with five of those enjoying double-digit improvements in performance. On the other, the sector accounted for almost a fifth of UK insolvencies in the last quarter.
With more insolvencies forecast, it’s unsurprising that journalists are now asking whether fortunes are being shared appropriately between major contractors and the SMEs they sub-contract to.
For those managing company reputations, it’s a fine balance of recognising the challenges within the supply chain while highlighting some of the underlying factors contributing to growth at the top. For example, most recently published financial accounts represent the first full year of activity post-Covid. In that time, many firms have also managed to work through legacy fixed price contracts and built flexibility into new ones – protecting thin margins by tethering prices to increasingly stable input costs.
Comms teams will need to lean into this while being mindful of what else is going on in-house. For example, some PLCs appear to have begun paying down debt at a time when the industry’s working capital is tight and payment terms, in comparison to other sectors, are relatively generous.
They’ll also need to continue highlighting the work their business is doing to make a difference in the world. Treating partners fairly should be a given. Now is the time to go beyond and showcase social value in action. Many of the brands we work with are showcasing just what’s possible in that space. For those that aren’t telling those stories effectively, media scrutiny will represent a heightened reputational risk heading into the winter.
By Tim Wood, Senior Account Director