Substantial decline in sales continues

AGGREGATES, cement, asphalt and ready-mixed concrete volumes fell sharply during the second quarter of 2009 as the construction recession intensified, according to the latest quarterly survey of construction material trends by the Mineral Products Association.

Compared with the same period of 2008, sales volume of crushed rock and sand and gravel aggregates fell by 29% and 27% respectively, cement and ready-mixed concrete by 32% and 37% respectively, and asphalt by 24%.

The MPA says these rates of decline are broadly similar to the first quarter, and are likely to moderate slightly in the second half of the year, as industry demand dropped dramatically in the third and fourth quarter of 2008, so the comparative base is reduced.

Commenting on the figures, MPA executive director Simon van der Byl said: ‘These are awful numbers and the market decline we see in 2009 will be the worst since records began. This year is also likely to show the biggest annual reduction in construction output in the post-WW2 period and the lowest number of housing starts since 1924, highlighting the unprecedented market conditions our industry and other material suppliers are operating in.’

With recent forecasts predicting a further decline in construction activity in 2010 and a very slow subsequent recovery, Mr van der Byl said the Government should be planning to sustain much needed investment in the country’s infrastructure and public services, to help underpin the economy, as well as utilizing the huge spare capacity available in the construction and materials industries and supply chains.

Yet, instead of adopting this course of action, he said the Budget had set out a 50% reduction in public net investment over the next four years.

‘It is hugely disappointing that a government which took decisive actions to support the financial sector is not prepared to use a fraction of those sums to sustain investment when it is most needed,’ he commented. ‘The resources of our sector and the rest of the construction industry will be wasted unless there is a far more positive approach to investment by the Government as economic recession moves towards a fragile recovery.’