News

Poor weather during the first three months of 2013 has hit sales of construction products.

Producers, suppliers and consumers of cement and ready mix concrete will be concerned at the latest figures from the Construction Products Association that show sales of heavy side products falling for the fourth consecutive quarter, with 39% of firms reporting a fall in sales.

The Association?s latest State of Trade Survey also indicates that despite seeing a rise in light side sales in Q4, volumes were once again lower both on a quarterly basis and compared to a year ago.

Commenting on the figures, Construction Products Association economist, Milja Keijonen said the poor weather in January and March certainly had an adverse affect on sales.

It is not all doom and gloom however, as both heavy and light side manufacturers anticipate a catch-up in sales in Q2 as improving weather conditions kick-start infrastructure and housing projects.

Furthermore, a growth in sales is expected over the next 12 months and export sales continued to grow in Q1, with 15% of heavy and 21% of light side manufacturers reporting increased export volumes compared to Q4.

Overall, 2013 is likely to be a challenging year for the industry but there are areas of optimism among the dark clouds, Keijonen added.

Speaking to an invited audience, including members of the Builders' Merchants Federation, at the prestigious Policy Exchange in central London he said the prospect of home ownership was slipping away for many young hopefuls.

Voters in England must accept the building of homes on undeveloped land for the sake of younger generations, Planning Minister Nick Boles MP has told consumers of cement and ready mix concrete.

The Communities and Local Government Minister blamed today's housing crisis on the failure of previous governments to release enough land for development, and also on inflationary house prices caused by constrained levels of homebuilding.

Boles used the occasion to announce that communities that welcome development in their area will receive up to 15 percent of the Community Infrastructure Levy (CIL) raised so that local residents can put this money to community use.

To encourage active take-up, he said this percentage would rise to 25 percent for communities that have adopted a Neighbourhood Plan.

BMF policy manager Brett Amphlett is reported as saying it was intriguing to hear a Conservative Minister using social justice as an argument in the housing debate.

He was keen to establish moral grounds for building new homes on undeveloped land and his vocabulary marks a significant hardening in the stance of his government towards "NIMBYs".

And it reveals the exasperation of ministers that reforming planning has not accelerated homebuilding, he added.

Following the publication of positive figures showing that construction orders increased in the final quarter of 2012, the ONS has published more data that suggests output fell at the start of 2013.

Producers and consumers of cement and ready mixed concrete will be concerned at the figures that show falls across almost every sector of the £100 billion industry.

Overall, construction output in January was 6.3% lower than in December and 7.9% lower than it was one year ago.

Commenting on these latest figures, Noble Francis, Economics Director at the Construction Products Association said although poor weather during January undoubtedly exacerbated conditions, the construction output figures illustrate the current state of the industry.

Output in the last three months was 11.0% lower than in the previous three months and 10.2% lower than a year earlier.

Furthermore, these latest figures clearly indicate that construction output is likely to fall in the first quarter, worsening conditions for the wider economy.

He went on to say the government has made a large number of announcements over the past two years including £5.5 billion capital investment in Autumn Statement 2012 in addition to £4.69 billion capital investment and £20 billion private finance investment for infrastructure in Autumn Statement 2011.

However, infrastructure output in the three months to January was 9% lower than a year earlier, he added.

Commenting on the Government's response to the Richard Review of apprenticeships, Brian Berry, the Chief Executive of The FMB said the number of small construction firms employing an apprentice has fallen over the past two years.

The Government is right to recognise that employers need more say when it comes to the content of apprenticeship qualifications, according to an organisation representing consumers of cement, ready mixed concrete and other construction products.

However, despite the fall in construction output since 2008, the sector still has a recruitment requirement of almost 30,000 per year.

Berry went on to say employers must have confidence that apprenticeship qualifications are suited to the needs of their business before investing in a new recruit.

The FMB also agrees with the Government that in addition to the core elements of any qualification, there should be options employers can pick from.

In the construction industry, this would provide flexibility for multi-trade firms and benefit employers who want more say on the type of skills their apprentices learn at college.

Whilst welcoming the potential benefits of restructuring apprenticeships, changes to the funding arrangements must take into account the needs of small employers who wish to continue to have access to government-funded training provision from local providers, he added.

Construction new orders for the last three months of 2012 rose 3% compared to the third quarter and were 11% higher than the same quarter one year earlier.

New figures from the ONS are cause for cautious optimism for cement and concrete producers and consumers.

Although new orders remain at historic lows, this is a second consecutive quarter of growth and potentially provides positive signs for the industry going forward.

Commenting on the ONS figures, Milja Keijonen, Economist at the Construction Products Association said output in construction fell 8% in 2012 and so the second consecutive quarter of growth in new orders provides some much needed positive news for the industry.

New orders are a forward-looking indicator and it will take around 12-18 months before the industry sees the benefits of this in construction output.

Private housing has a much shorter time-lag between orders and output so the 10% growth in this sector during the fourth quarter, compared to the previous quarter and year, should lead to a rise in output this year.

The £10 billion of capital investment announced by the government over the last two years is yet to provide significant activity on the ground. If it were to occur, it would add an extra 0.8% to GDP, even without taking account of any wider benefits, Milja added.

According to the Mineral Products Association, the decision to freeze the indexation of the Aggregates Levy until April 2014 is particularly welcome.

The MPA was also pleased at the decision to introduce the Climate Change Levy mineralogical and metallurgical exemption for energy intensive industries such as cement and lime.

Nigel Jackson, Chief Executive of the MPA, said the organisation has lobbied hard on both of these issues, together with the need for savings in current account spending to be invested in capital projects.

The additional investment in roads announced in the Autumn Statement is crucial given the need to repair and maintain our worsening road network.

Jackson went on to say the Government is clearly listening and understands that investing in infrastructure and construction is key to securing growth. However, the issue remains of ensuring that cash flows into action on the ground, to help improve confidence and induce private sector investment which is needed to accelerate growth in demand.

The MPA will continue to work with Government to help them achieve their aims of reducing the deficit whilst securing growth, he added.

Producers of aggregates and building products have welcomed measures in the Chancellor's Budget which, when taken as a package, help boost the outlook for the mineral products and construction sectors.