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Fri September 25 2020

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Pressures grow for construction products manufacturers

3 Oct 11 The extent of the impact of public sector spending cuts is highlighted by the latest state of trade survey of among building products manufacturers.

The Construction Products Association’s latest survey today shows that business has taken a definite turn for the worse in the third quarter, after an encouraging second quarter had raised hopes.

The continuing economic uncertainty, coupled with rising prices and weakening domestic demand, are adding to the concerns for many member firms.

Despite a relatively positive Q2, during which export volumes rose, the latest quarter has shown a marked deterioration in trading conditions. Heavy side manufacturers are already seeing a decline in sales activity. Although light side firms continue to show some positive activity, their expectation for the coming year is also falling sales. 

Commenting on the figures, Construction Products Association senior economist Kelly Forrest said: “‘Although industry has been well aware of the cuts to public spending since the CSR last October, concerns for the industry have been heightened by uncertainty regarding UK and global economic activity. Furthermore, the state of the industry continues to be badly affected by rising costs with 71% of light side firms and 89% of heavy side firms reporting that costs rose once again in Q3.

“‘While industry is well aware of the need by government to address its finances, it is critical that government does its utmost to sustain economic growth by investing in areas of long term benefit to the UK, such as house building and infrastructure by bringing forward finance allocated for future years and attracting private finance at a time when public finances are constrained.”

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Other key points include:

  • 44% of heavy side manufacturers report year-on-year sales falling in Q3, although 52% of manufacturers of light side products, typically used in the later stages of the construction process, continued to see growth
  • 94% of heavy side firms and 71% of light side firms suggest weak demand will constrain output over the next 12 months
  • The majority of manufacturers, 63% of heavy side firms and 75% of light side firms,  anticipate no change in their export sales over the next 12 months
  • 65% of light side firms and 75% of heavy side firms expect employment to remain unchanged over the next year
  • Manufacturers plan to invest strongly in product and web development over the next year as competition intensifies

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MPU
MPU

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