Construction industry fears realized

THE position for construction product manufacturers has continued to worsen and this trend is expected to persist throughout 2009 with the initial sharp falls in private housing and industrial sectors during 2008 being replicated by sharp falls in the commercial sector during 2009 and 2010.

This is the stark message from the latest joint Construction Products Association and Construction Confederation trade survey.

The survey, which covers the third quarter of 2008, reports further gloom for the industry as the deterioration extends across previously buoyant sectors. Heavy-side manufacturers have continued to suffer falls in sales volumes owing to the depressed private housing market and slowing of the commercial sector, but now light-side manufacturers are beginning to suffer too.

Commenting on the survey, Noble Francis, economics director at the Construction Products Association, said: ‘Our forecasts indicate that private housing starts this year will fall 39%, leaving housing starts at their lowest level since 1945. Although the housing market has experienced the worst effects of the economic slowdown, the industrial sector has now also fallen sharply, and the commercial sector has also seen a slowdown.

‘Both for manufacturers and contractors, the downturn in workloads has occurred at the worst possible moment, with costs rising and profit margins falling. It is clear that construction as a whole is currently under great pressure and both this survey and the Association’s latest forecasts imply that this is unlikely to ease in the near future.’

Stephen Ratcliffe, chief executive of the Construction Confederation, said it was crucial for the public sector to hold its nerve and for government to stick to the investment programme promised in the Comprehensive Spending Review.

‘Government also needs to work with industry to ensure more effective public procurement – helping to reduce industry costs,’ he added. ‘Measures we have been asking for include clearer information on long-term investment programmes; steady deal flows; and more integrated supply chains involved in projects at an earlier stage.’