While the pressure from inflation and high interest rates has subsided since the end of the financial year, directors said the macroeconomic environment remains challenging as the residual effects have lingered. Their strategic report, which was signed off in October, further noted the impact of this on the company’s timber division, which provides products to the wider building sector.
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“Demand for new-build residential properties continues to be impacted by mortgage rates and availability, restricting demand,” directors said in the accounts filed with Companies House. “It is expected that the housing market will remain volatile in the short-term.
“Timber engineered product and timber importing divisions will continue to be impacted by demand for new-build residential housing and demand more generally in the construction sector.”
James Walker, which employed more than 430 people during the year, is far from alone in this boat.
Latest official figures show that housebuilding activity plummeted in Scotland during the year to September 30, with completions down 10% to 19,827. New starts were down by a larger margin of 12% at 14,768.
The impact of this has been reflected in a relatively high number of companies going bust, with the construction industry experiencing the largest proportion of UK insolvencies during the 12 months to September.
According to the Insolvency Service, there were 13 construction company insolvencies in Scotland during November, accounting for more than 11% of all insolvencies across the country. That was a decline of nine from the previous month, but for the year as a whole were up by 6.5% to 212.
Experts have noted that as with all employers, the forthcoming increase in national insurance contributions will raise the cost of materials and labour in the construction sector. How this plays out will be one of the big questions hanging over builders in the coming year.