Competitive pressures on middle‐market contractors in the UK

Medium‐sized regional building contractors in the UK are exhibiting poorer performance in the 1980s and the 1990s and are less likely to survive than their larger or smaller counterparts. The market structure of contracting appears to be changing, putting pressure on these intermediate firms. Evidence drawn from the Department of the Environment (DoE) statistical series shows industry composition is changing, in particular the gradual decline over time of the middle market. An analysis of company accounts for a sample of approximately 200 contractors shows that medium‐sized firms are also displaying inferior business ratios. Possible explanations are offered, including barriers to entry, such as capitalization, economies of scale (pecuniary and market), along with changes in construction demand.