Diving into the surveyed statistics of the Construction industry
Meet our industry specialist, Andrew McCulloch, Regional Manager
I’m delighted to bring you the latest news from the Construction & Recycling business. As always, it focuses on the current industry trends and how they are affecting SMEs, whilst also demonstrating the support Close Brothers Asset Finance has offered to businesses within the industry.
We start this issue, on page 3 with a case study where one of our customers was able to purchase a new quarry through a tailored refinance agreement provided by Close Brothers Asset Finance.
We pride ourselves on our ability to provide tailor-made finance agreements that are suitable for individual businesses. Our teams are specialists in their field, with many having worked within the Construction & Recycling industry themselves.
By working closely with you to understand your business, our team of industry experts see the potential for growth and can provide straightforward asset finance options to support this.
Asset finance can help businesses of all sizes get the equipment, vehicles and machinery they need. All without having to pay the full price upfront. It can be used for both new and second-hand assets, or as a way of releasing the value from those you already own.
Common examples of the asset finance products we offer include Hire Purchase, Refinance/Capital Release, Finance Lease and Operating Lease.
To find out more about any of the finance options we have to offer and how they could work for your business, contact the team today on 01244 456 504.
If you turn to pages 4 and 5 you’ll find our Business Sentiment Index; our confidence tracker based on business owners’ views and thoughts on the industry. This update will look at how sentiment amongst Construction firms has fallen unlike many other industries.
On page 6, we have a case study featuring Logs Direct Ltd. This log supply business
was able to acquire a new kiln drier using a Hire Purchase agreement, provided by Close Brothers Asset Finance.
Finally, on page 7 we have our ‘Meet the Expert’ feature. Andrew McCulloch is a Regional Manager and industry expert within our Construction & Recycling team, here he discusses his predictions for the next 12 months across the industry and the favourite aspect of his role.
We hope you enjoy the read and as always, we look forward to working with you in the future.
Andy Sagar Managing Director, Construction & Recycling
Our customer is a well-established construction business which had grown from a small family firm into a comprehensive service provider in the construction industry, offering plant hire, grab-away services, and building supplies.
The construction business was looking to acquire a new quarry to enhance their raw material supply and boost turnover and profits. However, the purchase required significant capital not readily available through their existing cash flow.
To address this, the business approached Andrew McCulloch, Regional Manager with Close Brothers Asset Finance for a funding solution. Andrew proposed a tailored refinance agreement leveraging several of the business’ existing assets to release the required capital.
The successful refinancing enabled our customer to secure the new quarry, significantly boosting both their market position and profits. This strategic use of asset refinancing is just one of example of how effective leveraging existing assets to grow your business can be.
Andrew McCulloch commented: “Refinancing is just one way in which we can help our customers purchase assets that can help their business growth. In this case, it was a great pleasure to work with our customer and help them acquire the new quarry. I look forward to working with them on further agreements in the future.”
Our customer commented: "The refinance agreement was the perfect solution, providing the capital we needed to purchase the quarry. This move has significantly strengthened our business and has bolstered our plans for the future. We would look to work with Close Brothers Asset Finance if we require finance again.”
While Close Brothers Asset Finance’s Business Sentiment Index (BSI), which measures SME business confidence, has risen modestly for the third consecutive research period, the Construction sector has seen a fall in confidence.
Construction firms’ appetite to invest dipped from 69% in September 2023 to 60% in January 2024 as the UK economy continues to perform sluggishly, interest rates remain at their highest levels for some time, and the housing market experiences ongoing uncertainty.
QDoes your business plan to seek funding for business investment in the next 12 months?
The number of companies that have missed business opportunities because of a lack of available funding continued to fall and this latest figure is in line with the more normalised levels achieved for this question, last seen in May 2022.
At 34% (Sept 2023: 46%), the Construction sector’s responses are outperform those of the UK, as a whole.
Q Have you missed a business opportunity in the last 12 months, due to lack of available finance?
Confidence in the macroeconomic outlook among SMEs has incrementally improved, achieving positivity for the first time in around two years, but it’s worth remembering that in November 2021, 75% of respondents were positive about the economy – by January 2024 this had reached just 46%, which is itself an improvement.
The latest results suggest that positivity has; however, fallen back quite significantly for Construction firms, which – given the headwinds the sector is facing – confirms what many are experiencing.
Q How would you best describe your business's economic outlook for the coming 12 months?
Contrary to the overall BSI result, predictions about future business performance fell slightly. Most firms expect to continue treading water in 2024, with their prospects remaining unchanged.
Q In general, how do you expect your business to perform over the next 12 months?
Steve Gee, CEO of Close Brothers’ Industrial Equipment Division, said:
“The recovery in confidence, albeit cautious, among the UK’s small and medium business owners continues, is clearly positive news.
“However, our research reinforces the feedback we’re getting from the stakeholders in our key sectors that the recovery in sentiment very much depends which industry they operate in.
“Our commitment to the SME community is that we will continue to work with firms through the cycle, providing expert advice and building long-term relationships, as we’ve always done.
With nearly two decades of trading experience, Logs Direct Ltd is a recognised brand for those wishing to purchase kiln dried logs in the UK. To keep the business moving, the decision was made to upgrade their log drying facilities to meet growing demands and enhance operational efficiency. The business opted to purchase a Glen Farrow Log Kiln Drier aiming to replace their older facility and to bring the log drying process in-house.
To fund the new kiln drier Logs Direct Ltd approached Simon Knox, Regional Sales Manager for Close Brothers Asset Finance, who had previously worked with the company. Simon suggested utilising a Hire Purchase agreement for the kiln drier.
By using Hire Purchase, Logs Direct Ltd can spread their payments over an extended period, helping them maintain good cash flow. Another benefit of this product is that the business will own the log kiln drier outright at the end of the payment period, representing a valuable long-term asset.
With the assistance of the agreement provided by Close Brothers Asset Finance, Logs Direct Ltd have been able to acquire the Log Kiln Drier, offering the company increased productivity and efficiency. By bringing the log drying process in-house, the company has eliminated intermediaries, reduced costs, and is able to ensure control over the final product's quality.
Simon Knox commented: "Collaborating with Logs Direct Ltd on this strategic investment showcased the power of tailored financing solutions. The Hire Purchase agreement not only met their financial needs but also positioned them for sustainable
growth in a competitive market. I look forward to working with this team on further agreements in the future to take this business from strength to strength."
"Simon and the team at Close Brothers Asset Finance were very easy to deal with. The acquisition of the Glen Farrow Log Kiln Drier marks a milestone for Logs Direct Ltd. This investment not only enhances our operational capabilities but also reflects our dedication to delivering top-quality kiln-dried logs to our customers, ensuring our continued success in the industry." Andrew Foulds, Co-owner, Logs Direct Ltd
Andrew McCulloch is a Regional Manager within our Construction & Recycling team. Here he discusses his journey to Close Brothers Asset Finance and what he thinks 2024 will hold for the industry.
Briefly tell us about your role and what you do…
I am currently a Regional Manager within the Construction & Recycling team; my main responsibilities involve working closely with businesses throughout the UK to assist them in the purchase of new assets through tailor-made funding solutions. As well as the purchase of new assets, we can assist with the refinance of existing equipment to release capital, often enabling an organisation grow. My two key responsibilities, looking after the UK wide Blue Machinery account and looking after a team of Area Sales Managers, mean that I am at my desk most of the time. However, I still get out and about visiting customers, with 1 or 2 days a week spent on the road.
What was your journey to Close Brothers Asset Finance?
I went to University in Liverpool, studying business and finance. After graduating in 2018, I started with Close Brothers Asset Finance in the Sales Academy. Following my successful completion of the Academy, I started my role as an Area Sales Manager in the Construction & Recycling team. Four years later, I was promoted to Regional Manager, and I now look after a great team who work with our largest introducer account across the Construction & Recycling business.
What’s the favourite part of your role?
I would have to say working with our customers on projects. It’s great to get to know them and their businesses. Over the years I have been able to assist with financing opportunities such as wash plants and recycling lines. Working with these customers to find suitable funding options that work for their cashflow, timeline and supplier requirements, is a great experience.
Outside of work, how do you like to spend your time?
I like my sport, I enjoy playing tennis in my spare time and golf, with my ever-improving handicap currently at 18. I also like to get some peace and quiet by walking my cocker spaniel, Otto.
Can you give us an example of a time where asset finance has helped one of your customers?
This is hard to narrow down to just one time, as we have been fortunate enough to help many customers. In particular, we have been able to help several customers unlock funding by refinancing a wide range of construction equipment, from crushers to 8-wheel tipper grab wagons. These customers have used this newly released capital to grow their businesses through the purchase of new equipment and in some cases, the acquisition of new quarries.
What assets are you finding the most ‘in demand’ at the moment?
We fund such a wide variety of equipment; it would be impossible to say which has been in more demand than others. However, this past winter has brought different challenges to all businesses, in particular the weather, meaning the equipment they need to tackle these problems had changed. With these challenges that our customers have faced, we have been doing what we can to help, including helping them manage payments during the slower periods.
What do you think 2024 holds for the Construction industry?
The year has started off quite slowly, with high interest rates and bad weather both having an impact. But from speaking to customers, I get the sentiment that businesses want to push on and pull back what has been lost in the first quarter of this year. I think with the potential of a good summer and autumn, I would expect to see the Construction industry flourish and get much busier.
Our teams are specialists in their fields and experts in asset finance. Contact Andrew and the team today by calling 01244 456 504
