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CPA: Final quarter “very poor” as construction industry and SMEs hurt by public sector funding cuts

CPA: Final quarter “very poor” as construction industry and SMEs hurt by public sector funding cuts

The latest Construction Trade Survey published today shows that the final quarter of 2011 was very poor for the vast majority of the construction industry, especially SMEs, which continues to be constrained by a lack of finance and sharply falling public sector funding.

Commenting on the survey, Noble Francis, Economics Director at the Construction Products Association said: ‘Cuts to public sector capital budgets had a tangible impact on activity across the construction supply chain, exacerbated by economic uncertainty and a lack of lending. As a consequence 2011 Q4 was very challenging for the industry. However, of even greater concern, previously positive workloads in sectors such as commercial and private housing have now become negative. Furthermore, prospects for the industry in 2012 are poor with sharply deteriorating order books and enquiries.

‘The only bright spots appear in exports and infrastructure. Yet this is unlikely to be sufficient to offset all the other sectors in which workloads are declining. As a consequence, instead of being a driver of growth in the UK, construction is likely to hinder economic recovery this year unless the Chancellor takes steps in next month’s Budget to stimulate the industry and the economy as a whole.’

Speaking about the survey Stephen Ratcliffe, Director UKCG, said: ‘Business conditions remain challenging but there are also still opportunities for the industry. UKCG is working with government to help ensure the pipeline of public sector projects announced at the time of the Autumn statement is translated into reality and that we help deliver the best possible value to a cash strapped public sector to ensure some continuity of work.’

Julia Evans, Chief Executive of the National Federation of Builders added: ‘With energy and material costs up, confidence down and lending conditions set to deteriorate further through 2012, it is hard to see how much of the industry will survive if these conditions are sustained. Marquee projects such as the Olympic Stadium will always give the impression of a vibrant industry but the vast majority of firms will only be able to survive for so long with cutthroat competition for work, unreasonable credit rates and late payment before they join the 2,700 construction firms that went into administration in 2011.’

Key survey findings include:
37% of large and medium sized building contractors, on balance, reported that output in 2011 Q4 was lower than during the same quarter one year earlier.
The civil engineering workload balance was positive (at +5%) for the first time since 2008 Q1.
Manufacturers of light side products benefitted from growth in export sales with 37% of firms, on balance, reporting year-on-year sales growth in Q4.
Enquiries levels to SME contractors were widely reported to be below average, by -30% on balance.
Nearly half of specialist contractors surveyed reported a quarter-on-quarter reduction in orders in Q4.
Materials cost inflation and rising energy prices were the main drivers of strong overall cost inflation in the last three months of 2011.

ENDS
Note to Editors:
CONSTRUCTION PRODUCTS ASSOCIATION:
The Construction Products Association represents the UK’s manufacturers and suppliers of construction products, components and fittings. The Association acts as a single voice for the construction products sector, representing the industry-wide view of its members. The sector has an annual turnover of £50 billion and accounts for 40% of total construction output.

The Construction Products Association undertakes a comprehensive quarterly survey of its members operating across this sector.

National Federation of Builders:
The National Federation of Builders (NFB) represents over 1,500 builders and contractors across England and Wales. In addition to providing specialist advice and business services, the Federation, with a network of eight regional offices, lobbies local, national and European government on a range of issues to sustain positive trading conditions for members. With origins dating back to 1876, today's NFB is a modern organisation providing the medium sized contractor and smaller builder with an unparalleled package of services.

National Specialist Contractors Council:
The National Specialist Contractors Council (NSCC) brings together the common aims of specialist trade organisations within the construction industry and is the authoritative voice of Specialist Contractors in the UK. NSCC has 32 member organisations that collectively represent over 7,000 Specialist Contractors engaged in the planning, design, construction, refurbishment and maintenance of the built environment in both the commercial and domestic sectors. By using the collective strength of the specialist sector, NSCC has the influence to make a real difference to how the UK construction industry operates.

CIVIL ENGINEERING CONTRACTORS ASSOCIATION:
The Civil Engineering Contractors Association has over 300 member firms that carry more than 80% of all civil engineering work in Great Britain. The CECA survey of civil engineering workload trends, in which more than a third of the membership takes part, tests for changes over the past year in contractors’ workload, workforce, order books, cost trends, and tender prices. It also examines the supply situation for key resources, and contractors’ expectations of trends in new orders and employment in the coming 12 months.

UK CONTRACTORS GROUP:
The UK Contractors Group represents more than 30 leading contractors operating in the UK. Its mission is to represent contractors’ interests to government and key clients and to encourage contractors to work together to promote change and best practice, especially on health and safety and environmental issues. UKCG also works closely with the CBI Construction Council to ensure that contractor’s interests are properly reflected in the wider business agenda.

FEDERATION OF MASTER BUILDERS
The FMB is the largest employers’ body for small and medium sized firms in the construction industry, and with 11,000 members, it is the recognised voice of small and medium sized builders. FMB is committed to promoting excellent standards in craftsmanship and assisting builders to improve levels of building performance and customer service. Within its membership, the FMB has around 4180 firms which engage in house building, either as their primary function or as part for the suite of building services they provide, but most are primarily active in the domestic RM&I market.

FOR FURTHER INFORMATION CONTACT:
Noble Francis, Economics Director
Construction Products Association
Tel : 020 7323 3770
Mobile: 0791 261 2882
Fax : 020 7323 0307
E-mail : noble.francis@constructionproducts.org.uk

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

Nicola Smith
External Affairs Manager
Construction Products Association
26 Store Street
London WC1E 7BT
Tel: 020 7323 7247
Fax: 020 7323 0307
nicola.smith@constructionproducts.org.uk
www.constructionproducts.org.uk

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