CPA: Construction products industry barometer predicts further job losses

CPA: Construction products industry barometer predicts further job losses

CPA: Construction products industry barometer predicts further job losses

The sale of construction products is expected to decline further over the coming months, leading to more job losses and continuing gloomy conditions according to the latest Ernst and Young/ Construction Products Association Activity Barometer. 60,000 jobs have already been lost to the industry with a further 9,000 losses announced in the last three months, but this latest prediction is expected to result in even more job losses over the coming months.

The survey once again records a new low, giving an overall score of just eight for the first quarter of the year against a 50 mark representing ‘no change’ and contrasts dramatically with a score of 80 less than two years ago.

Commenting on the results, Noble Francis, Economics Director for the Construction Products Association said; “Once again the heavy side manufacturers are indicating the severest conditions, recording an unprecedented score of zero for the last three months as their sales continue to decline. The future picture also shows that virtually all manufacturers are expecting sales to carry on decreasing as the recession continues. Similarly light side manufacturers are enduring sales falls albeit it from a higher base, but they too are now predicting a very gloomy few months as their figures are expected to match those that the heavy side is currently experiencing.”

Dominic McAra, a Director in Ernst & Young’s Construction Products team added:
“The last quarter has been particularly tough for Construction Products companies. The recession, coupled with the coldest winter for several years, has adversely impacted sales and cash flows.

“It will be the companies with strong cash reserves that will find 2009 the least painful and therefore it is no surprise that a number of the larger companies in the sector have had – or are contemplating – rights issues.

“The next six to nine months is likely to see companies aiming to maximise liquidity and to ensure that they keep within their banking covenants. This will almost certainly result in further restructuring in the sector.

“For companies of all sizes keeping control of debtor and inventory levels in a sector where demand is uncertain is going to be a significant challenge for management.

“Whether the continuing downturn ultimately provides opportunities for the stronger companies to re-commence the sector consolidation will depend on the speed at which confidence returns.”

Ends

NOTES TO EDITORS:

1. The Construction Products Association represents the UK’s manufacturers and suppliers of construction products, components and fittings. The Association acts as the voice of the construction products sector, representing the industry-wide view of its members. The sector has an annual turnover of £40 billion and accounts for 40% of total construction output. The Association’s membership was surveyed in the third week of September 2008.

2. The Construction Products Association’s Construction Activity Barometer provides an advance indicator of trading conditions and prospects across the construction products industry at the end of each quarter. The Barometer complements the Association’s more detailed Construction Industry Trade Survey, published in conjunction with the Construction Confederation a month after the quarter in question, which provides a detailed assessment of a wide range of market pressures facing the industry; from manufacturers’ cost pressures and capacity utilisation, to the availability of site labour and contractors tender prices.

3. Product definitions: Heavy side products are typically structural materials used early in the construction process and include materials used in transport and other civil engineering projects. Heavy side materials include: aggregates, cement, ready-mix concrete, constructional & reinforcing steel and masonry products. Light side products are typically installed later in the construction process and include internal fittings & services. Light side products include: heating & ventilation systems, plumbing, electrical & lighting, doors & windows, kitchen furniture and thermal.

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FOR FURTHER INFORMATION CONTACT:

Simon Storer, Communications and External Affairs Director
Construction Products Association
Tel : 020 7323 3770
Fax : 020 7323 0307
Mobile: 07702 862 257
E-mail : simon.storer@constructionproducts.org.uk

Adam Holden, Media Relations Manager
Ernst & Young
Tel: 0121 535 2128 (Internal ext 51128)
Fax: 0121 535 2052
Mobile: 07917 000028
Email: aholden@uk.ey.com