Contractors World

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Contractors World UK & Ireland
2011 Volume 2 Issue 1
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Construction News - Economy - Business - Regulations

Sharp Fall Expected for Construction in 2012 -continued

Exports help product manufacturers

Photo: Steve Gibson

Exports help product manufacturers

The Construction Products Association’s latest State of Trade Survey shows that manufacturers, particularly on the light side, are benefiting from an increase in export activity to off-set the subdued level of construction activity in the domestic market.

34% of light side and 17% of heavy side manufacturers recorded growth in overseas sales during the past year and a further 55% and 71% respectively maintained export levels in a competitive global marketplace.

Commenting on the figures, Construction Products Association senior economist, Kelly Forrest said: ‘Against a difficult domestic backdrop, it is encouraging to see that exports are growing strongly, especially considering that export growth is a fundamental part of the government’s economic strategy. Furthermore, construction product manufacturers have invested heavily in developing trade links beyond the eurozone and, in Q4, 35% of light side manufacturers with export links sold products into the Asian market, a very high proportion by historical standards.

‘Future prospects for the UK industry, however, remain very uncertain, as cuts to public sector capital budgets impact on the ground and weak economic growth constrains the private sector recovery.

‘Strong input cost inflation also added to the pressures on manufacturers as price increases in raw materials, energy and fuel all had a significant impact on manufacturing costs.

‘Manufacturers of heavy side products, typically used in the early stages of the construction process, reported that conditions were challenging in Q4 but 2011, as a whole, was a better than anticipated year, due largely to publicly-financed work in progress feeding through more slowly than expected and strong growth in export activity. However, the cuts to public sector capital budgets are now having a tangible impact on the industry and demand from the eurozone, our largest trading partner, remains highly uncertain.’

Other key points include:

  • -22% of heavy side manufacturers, on balance, reported that sales fell in Q4
        (compared with Q3) and 35% reported no change in activity
  • In contrast, +22% of light side manufacturers reported sales growth in Q4
  • In the next 12 months -3% of heavy side firms, on balance, expect sales to fall,
       whereas +20% of light side foresee growth
  • 47% of light side and 82% of heavy side firms expect unit costs to increase
        in the next 12 months, largely due to further fuel and energy price inflation
  • 81% of light side manufacturers expressed concern about the strength of
        future demand

New Entrants Essential if Green Deal to Work

Responding to the Government’s Green Deal and Energy Company Obligation consultation, the Construction Products Association has acknowledged the enormous potential Green Deal could bring in improving the energy performance of UK buildings, but gave a cautionary warning that there were some fundamental issues that still needed to be addressed.

John Tebbit,  Industry Affairs Director - Construction Products Assoc - Contractors_World_UKResponding to the consultation, John Tebbit, (right) Industry Affairs Director at the Association said: ‘We all know that Green Deal has the potential to be a real game changer, but government must accept this is a long-term solution and not a quick fix opportunity.

“It is essential that the Green Deal allows new companies and organisations into the market, such as distributors, builders, manufacturers and installers. This will avoid any one part of the supply chain enjoying a dominant position in energy efficiency work; it will bring greater competition and encourage diversity.

“There must also be a process for ensuring product and installation quality allows innovative products and solutions to be introduced to the market whilst ensuring performance. Products and systems that already meet British and European standards, or are certified to reputable third party schemes, must not face additional testing or registration costs.

To make the Green Deal work, targeted fiscal incentives will need to be brought in and the Association has long held the view that a reduction in VAT to 5 per cent, both on Green Deal work and Green Deal equivalent energy efficiency work, is vital to send the right signals to the consumer as well as making the Golden Rule more achievable.

continued >>>






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