Downward pressure on pricing and lower margins have a tight grip on the HVAC market with contractors reporting a mixed outlook in the mid-2014 State of the Industry survey conducted by the Air Conditioning and Mechanical Contractors Association (AMCA).
AMCA national director David Eynon, said the level of optimism in the industry is in decline.
“When asked to identify what factors companies believe are likely to have an adverse effect on their business during the remainder of the year, low margins topped the list,” he said.
“Concerns about late payment continue to be a problem followed closely by the prospect of client insolvency.”
When compared to the survey results released at the end of 2013, contractors do report an increased order book but claim there is a drop in the number of invitations to tender.
“More companies are reporting a higher turnover but on the other side of the coin, lower tender prices are being submitted,” Eynon said.
“At the same time, respondents said labour cost increases are being contained but material costs are on the rise.
“And while there is a slight increase in employment, most respondents expect little change over the next six months so the results are pretty mixed.”
Eynon said information obtained around apprentice recruitment and training is not encouraging.
He said the survey found that fewer apprentices were employed in the first half of the year and companies indicated they are unlikely to invest any additional funds into training for the remainder of the year.
Federal Industry Minister Ian Macfarlane is the first to admit apprentice attrition is high and completion rates are low, which is why the government has launched a range of skills and training reforms.
“Employers, particularly small business owners, need better support to recruit, train and retain apprentices,” Macfarlane said.
To make this happen, the government has introduced $20,000 Trade Support Loans for apprentices. Repayments on the loans are not due until the apprentice completes training and is earning more than $50,000 per year.
The government is also close to finalising reforms for Australian Apprenticeships Support Services, which is delivered through the national network of Australian Apprenticeships Centres.
“I anticipate we will approach the market in late 2014 to contract providers to deliver next generation support services, due to commence from July 1, 2015,” Macfarlane said.
The government has also allocated $5 million to extend mentoring projects to give apprentices further support and guidance.