Escalating fuel costs spell stark news for contractor

Jul 4 2008 by Les Stewart, Perthshire Advertiser Friday

TAYSIDE Contracts will need to supplement its income “from other sources” to support the manning levels needed to provide the three local councils with their winter maintenance service.

That’s the stark warning from managing director Iain C. Waddell, in his annual report for 2007/08.

Mr Waddell says 79% of their work came from Angus, Dundee City and Perth and Kinross Councils over the past 12 months, highlights increasing fuel costs as one of the reasons.

He said: “From the information we have available to us, the council’s roads budgets can’t grow enough to meet the cost of construction inflation and rising fuel costs.”

In addition to gaining income from other sources, he adds: “We need to continue to manage our costs and productivity levels if we are going to maintain our operating margins.”

Tayside Contracts achieved an overall surplus of £659,000 in 2007/08, exceeding the budgeted figure of £600,000.

“The continued delivery of a sound surplus was achieved by good management of costs at a time when the construction industry has been facing annual inflation costs of around 10%,” points out Mr Waddell.

“In addition to this, we have been experiencing large increases in our fuel costs and landfill disposal costs.”

As agreed in their business plan, the organisation will return a surplus of £500,000 to the three constituent councils in 2007/08.

Perth and Kinross will get the biggest share – 38% – with 33% going to Dundee City and 29% to Angus Council.

The balance of £159,000 will be retained by Tayside Contracts in their general reserve fund for future agreed use.

l Tayside Contracts has 2,300 employees and an annual turn-over of some £59 million.