The UK’s 30 largest mechanical & electrical (m&e) contractors enjoyed collective growth of 23% last year despite a period of “considerable economic turmoil”, according to the Building Engineering Services Association (BESA).
The latest edition of the Association’s annual Top 30 Contractors’ report compiled in partnership with chartered quantity surveyors GHCS, technical recruitment firm GH Engage, and industry analysts Barbour ABI shows that the combined turnover of the 30 firms grew to £6.4 billion in 2023/24.
This represents approximately a quarter of the total m&e market which is estimated at £23.2bn “suggesting room for further consolidation in what is still a highly fragmented sector”, BESA said.
The report, which ranks contractors by their total turnover for the previous financial year and is compiled using published company accounts and information from Companies House, showed that firms were standing up well to “various financial headwinds” and were poised for further growth in 2025.
“The overall mood is surprisingly buoyant,” said BESA’s chief executive officer David Frise. “Judging from the comments made in our report by company directors and senior business figures, the outlook is generally optimistic despite the considerable financial, technical and regulatory hurdles they are having to navigate.”
Impact
He added that, while the long-term impact of the global market turmoil unleashed by Donald Trump’s tariffs remained uncertain, the best performing m&e engineering businesses covered in the BESA report were “remaining calm in the face of this latest ‘bump in the road’”.
GHCS/GH Engage managing director Gokhan Hassan said that new business models and subtle shifts in the industry’s supply chains could insulate parts of the sector from the worst impacts of global economic conditions.
“There is a growing spirit across the sector that goes beyond simple ‘resilience’,” he said. “However, a trade war was the last thing anyone needed coming so soon after the collapse of ISG and the inflationary pressures created by Brexit and the war in Ukraine.”
Several companies told BESA’s researchers that they were now operating outside ‘traditional’ m&e sector boundaries and finding specialist markets that placed a greater value on high quality engineering services and are less vulnerable to short-term financial shocks.
The fact that the UK has also become something of a ‘services superpower’ also helped to insulate it from the full impact of US tariffs which were primarily aimed at trade surpluses in manufactured goods, the report found.
“The specialist building engineering sector has some significant advantages because of its ability to add value in sectors that are largely ‘recession proof’,” said Hassan.
“These include data centres, which are now receiving another huge boost from the growth in AI, pharmaceutical production and research facilities, life sciences laboratories, energy transition, and defence.”
The BESA report found that, not only are these sectors continuing to build with confidence, but they are also heavily reliant on high value m&e engineering to provide clean rooms, resilient cooling systems, water and energy efficiency, etc. In many such facilities, the services represent upwards of 60% of the value of the overall project and, in a growing number, the m&e provider is taking the role of lead contractor.
While mainstream construction has been hit badly by delayed investment and rising costs, not helped by April’s rise in employers’ National Insurance deductions, parts of the sector are finding ways to operate outside traditional boundaries and secure higher margin work, the report found.
“This trend is also upending the traditional supply chain structure that has characterised construction for decades and which is, in large part, responsible for repeated failures to deliver projects on time, to budget, safely and sustainably,” said BESA’s membership director Rebecca Fox.
Regulation
The BESA report also referred to the impact of the Grenfell Tower public inquiry and its recommendations for further regulation, along with the developing influence of the Building Safety Act.
This has had a dramatic impact on planning approvals with some higher risk building (HRB) projects held up for over 40 weeks at huge expense to developers. BESA said that teething problems and lack of resource at the Building Safety Regulator have created an ongoing problem that will not be solved quickly and is having an impact on investors’ confidence in the residential building market.
“Many of the projects held up at planning ‘Gateway Two’ are refurbishment applications reflecting the enormous backlog of maintenance work required to bring HRBs up to standard,” said David Frise. “This seems to have caught the Regulator by surprise and needs a rapid solution to get this critical sector moving again.”
However, keeping up with demand remains a challenge – especially as the work becomes more technical, firms reported – and this will require more effort to address the industry’s long-term lack of investment in recruitment and training.
There is also a major shortage of specific, targeted training in specialist building services skills due to historic low demand. As a result, BESA has launched its Skills Legacy programme to tackle one of the biggest hurdles faced by the further education (FE) sector – the shortage of trainers and assessors.
It plans to recruit 100 experienced engineers motivated to ‘give something back’ by qualifying as trainers, assessors and building safety auditors. The Manly Trust is fully funding the first 50 in a move which was welcomed by the Association and the employers represented in the Top 30 report.
The BESA Top 30 Contractors’ report can be downloaded here.
www.theBESA.com