With the Office of National Statistics revising its dip in construction output in 2020 to a fall of 14%, and the Construction Products Association forecasting growth this year of 13.7%, it seems that the UK industry continues to bounce back. On the downside, there is the shortage of materials and skilled labour, and the inevitable rise in costs connected with these shortages.
It should come as no surprise that 65% of Council for Aluminium in Building (CAB) members have stated increases in sales of over 5% during the last year, and in the second quarter of 2021. A record 90% of members, on balance, expect sales to increase further in the next quarter. This is tempered with 15% of members stating that they have experienced a loss in sales over the last year. A further 20% state that they have experienced the same or less than 5% increase in sales over the period.
Costs have generally increased in all areas, with 80% of members, on net balance, stating that costs have risen in the past quarter. These increases generally fall in line with the rest of the construction industry. On balance, 90% of members forecast further increases with 97% of the wider construction industry bracing themselves for further price increases.
Critical costs have increased across the board, with wages, energy costs and fuel costs increasing. While 42% of members see the availability of materials as the major constraint on activity, 32% of members cite demand as a likely future constraint. This suggests that possibly not all sectors are seeing a steady growth.
CAB members are cautiously optimistic about further growth: 47% of members forecast that their capacity utilisation will continue to be over 90% in the next quarter. However, 50% of members see a capacity utilisation of over 90% for the year ahead. With a similar forecast increase in capacity utilisation in both the membership and the wider industry, this shows a stable optimism for the year ahead.
Just over half of our members (53%, on net balance) are seeking to increase their labour force in the year ahead. Just 13% claimed that they had increased their workforce in the last year. These figures, again, closely follow the wider construction industry forecasts.
As a proportion of sales, 55% of members reported that none of their production is exported, which matches that of the wider construction industry in the UK. Only 5% of members claimed to be exporting more than 15% of their production. The wider construction industry saw a drop of exports in the last year of 8% on net balance, likely due to the remnants of Brexit.
As would be expected, capital investment is aimed at plant and equipment, with 74% of members on net balance stating that investment had been made in the past year. A further 63% stated that future investment would be made in plant and equipment.
Overall, the wider construction industry is being bullish about the future growth in the sector. CAB membership seem to be a little more cautious, possibly due to increasing costs and lack of materials.
Chief executive of the Council for Aluminium in Building (CAB)