The Construction Products Association’s latest State of Trade Survey indicates that sales of construction products fell during the first three months of 2013 with poor weather exacerbating conditions for the industry. Construction Products Association economist Milja Keijonen comments on the figures.
The poor weather in January and March certainly had an adverse affect on sales in Q1. 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.
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. In addition, export sales continued to grow in Q1, with 15 per cent of heavy and 21 per cent 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.
The majority of manufacturers were affected by rising unit costs in the 12 months to Q1 with 78 per cent of heavy and 62 per cent of light side firms reporting higher costs on annual basis, on balance. 65 per cent of light side companies experienced annual cost inflation. Only four per cent of light side manufacturers across the board reported reduced costs year-on-year and 31 per cent of light firms stated that costs were unchanged.
Fuel and energy costs remain the key drivers of costs.Energy costs were the key driver of cost inflation in Q1. Companies indicated that energy prices had risen on an annual basis, on balance. Transport costs were the second most significant cost factor with 81 per cent of light side companies reporting higher fuel costs. 77 per cent of light side companies reported higher raw material costs year-onyear whilst the importance of exchange rate changes in influencing costs was highlighted by 30 per cent of light firms.
Production capacity among product manufacturers has fallen since the recession and in the past year capacity remained significantly underutilised. 52 per cent of heavy side firms stated that 70 per cent or less of the existing capacity was in use in the year to Q1, up from 43 per cent in Q4. Similarly, 39 per cent of light side manufacturers reported underused capacity, up from 29 per cent in Q4. Six per cent of heavy and nine per cent of light side firms indicated that over 90 per cent of existing capacity was in use in the past year with only three per cent of heavy and 13 per cent of light side firms anticipating to produce above 90 per cent capacity in 12 months’ time.
Product improvement remained the key investment priority for both heavy and light side product manufacturers. 65 per cent of light side companies reported increased investment over the last 12 months and 40 per cent of light side firms directed more finance towards R&D. Capital investment in e-business increased according to a third of heavy and over half of light side companies. In contrast, investment in plant or equipment fell.