Tuesday, 13 November 2018

Cost pressures cast a shadow over Construction growth says CPA

The construction industry experienced modest growth in the third quarter of 2018, following a weather-related boost to activity in Q2, according to a quarterly survey of product manufacturers, contractors, civil engineers and SME builders by the Construction Products Association       

The Construction Products Association’s Construction Trade Survey for 2018 Q3 shows that during the quarter, 27% of product manufacturers, 25% of main contractors, 16% of SME builders and 10% of civil engineering firms reported an increase in activity. Output was reported lower for one-third of specialist contractors, however. The new orders and enquiries logged in Q3 indicate that the drivers of growth in the next 12 months will be restricted to private housing, repair and maintenance, and infrastructure, whilst further rises in costs have been reducing profit margins for main contractors and specialist contractors since the beginning of 2017. On balance, 80% of main contractors reported a rise in materials and labour costs, 90% of product manufacturers reported an increase in fuel costs and cost rises for civil engineering contractors reached a three-year high.

Commenting on the survey, Rebecca Larkin, Senior Economist at the CPA, said: “The industry looks to have maintained some of the momentum from its catch-up in the second quarter. However, beneath the top-level growth rate, firms throughout the supply chain are grappling with a narrowing base of activity led by private housing and infrastructure work and rising costs for labour, raw materials and fuel. This triple threat for input costs is placing a clear strain on contractors’ profit margins, worsening confidence in an already-heightened environment of risk aversion.”

Richard Beresford, chief executive of the National Federation of Builders (NFB), said: “The latest trade survey indicates a general increase in construction output, workloads and enquiries for SME contractors throughout the third quarter of 2018. This trend reflects the effect of the unseasonably warm weather in lifting up overall industry performance. The fall in profit margin for 7% of main contractors and 33% of specialist contractors is rather worrying because it is less than one year since the collapse of Carillion. With the economy facing further uncertainty in future months with the UK’s departure from the EU in March 2019, contractors operating with falling profit margins are a reason for concern.”

Commenting, CECA Director of External Affairs Marie-Claude Hemming said: “We welcome the fact that the infrastructure sector has enjoyed a second quarter in a row of growth, but there are some concerns as to poor growth in future orders. Given the substantial pipeline of work that exists, we would expect that order books would be rising at a greater rate that they have done in the last six months. It may be that clients are wary of investing given the uncertainty surrounding the effects on the economy of the UK leaving the European Union in 2019, and the inability of businesses to plan adequately for the future, given the failure of Brexit negotiations to progress beyond their current impasse.”

Key survey findings include:

  • On balance, 25% of main building contractors reported that construction output rose in the third quarter of 2018 compared with a year ago
  • 10% of civil engineers, on balance, reported an increase in workloads during Q3
  • On balance, 16% of SME contractors reported increased workloads in Q3 compared to three months earlier
  • Main contractors reported that order books were higher in private new housing, and the housing and non-housing R&M sectors
  • 15% of civil engineering firms reported an increase in new orders in Q3, on balance, but new orders fell for 17% of specialist contractors
  • 22% of SMEs reported an increase in enquiries in Q3, on balance
  • Overall costs increased for 89% of civil engineering contractors, whilst 80% of main contractors reported a rise in costs for labour and materials. Fuel costs rose for 90% of heavy side and light side product manufacturers
  • Profit margins fell for 7% of main contractors and one-third of specialist contractors in Q3.

Monday, 5 November 2018

Civil engineering drives construction growth in October

UK construction growth increased during October, driven by a rebound in civil engineering activity.

Having declined in both August and September, civil engineering activity grew at the strongest pace since July 2017. Housing and commercial construction also expanded, but at weaker rates.

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index rose to 53.2 in October, the second highest level in 16 months. This was up on 52.1 in September and against the no-change reading of 50. A figure below 50 indicates contraction.

However, there was a slower rise in new business volumes, with firms mentioning intense market competition and delayed final decisions from clients. Business expectations fell to almost a six-year low.

Consequently, input purchasing increased more cautiously, at the slowest rate in seven months. Despite this, delivery times for construction products and materials continued to lengthen and firms continued to report stock shortages at vendors.

Cost pressures remained strong, despite the rate in input price inflation falling to a 27-month low, with companies highlighting increased costs for fuel, labour, timber and steel.

Duncan Brock, group director at CIPS, said: “These results point to the sector getting stuck in the mud as we approach March 2019, and with ongoing supplier delays and stock shortages, the sector may not be able to respond quickly enough anyway should there by a sudden upturn in fortunes.”

Trevor Balchin, economics director at IHS Markit, said: “Construction firms continued to raise headcounts at a strong pace, suggesting they are not expecting an imminent contraction in demand. That said, if the new orders and expectations indices remain at current levels or fall further, the employment index could also drift back towards the 50 no-change mark.”

Photo: From Shutterstock

Thursday, 1 November 2018

November Job in Focus: General Manager for Bathroom Products in West Midlands - £60k

Our Job in Focus for November is General Manager's position for High-end Bathroom Products. Based in the West Midlands.

You will be handed full responsibility for managing the staff, managing the budget, purchasing and sales as well as all things operations. You will be tasked with driving growth, increasing profitability, health and safety responsibility, implementing process procedures. You will work closely with other departments such as HR as well as Marketing and Sales. £60k + benefits

Our Construction & Building Industry Job in Focus feature takes a detailed look at some of the fantastic sales & marketing construction and building materials job vacancies currently on our books. 

Job in Focus is also promoted on our website. www.pinnacleconsulting.co.uk 


Job Title: General Manager
Job Ref: J11134
Product: Bathroom Products
Location: West Midlands
Salary: £60k

General Manager for Manufacturer of high quality bathroom products. 

Package: £50,000 - £60,000 phone, laptop, pension and 20 days holiday plus bank holidays and Christmas shut down. 

Role: General Manager - You will be handed full responsibility for managing the staff, managing the budget, purchasing and sales as well as all things operations. You will be tasked with driving growth, increasing profitability, health and safety responsibility, implementing process procedures. You will work closely with other departments such as HR as well as Marketing and Sales to maximise the exposure for our client's high-end bathroom products 

Location: West Midlands based candidates could live in Shropshire, West Midlands, Warwickshire, Staffordshire, or Worcestershire 

Candidate: We are looking for candidates who have experience managing a large manufacturing business at either general manager level or operations manager level. Candidates with experience in the bathroom market would be at an advantage but this is not essential. 

To find out more about this opportunity contact James on 01480 405225 or apply online.

Monday, 29 October 2018

Builders' merchants sales continue to be up on the year

The latest data from the Builders Merchant Building Index (BMBI) shows that the value of sales at UK builders’ merchants was up 3.5% in August 2018 compared with August 2017 but down 3.4% on July 2018.

Year on year, Timber & Joinery Products were up by 9.5%, Landscaping was up by 6.9%,   Heavy Building Materials were up by 1.6% and Plumbing Heating & Electrical products were up by 1.2%.

Compared with the previous month, however, all product categories saw sales dip in the holiday month of August except for Workwear & Safetywear, which was up 2.5%.

For the first eight months of 2018, average daily sales were up 3.9% overall compared to the same period of 2017 and the rolling 12-month period saw an increase of 4.8%, driven by Plumbing Heating & Electrical (up 8.7%) and Timber & Joinery (up 6.9%).

The Builders Merchant Building Index (BMBI) tracks builders’ merchants’ actual sales to builders and contractors using GfK’s Builders’ Merchant Point of Sale Tracking Data. The BMBI represents over 80% of the value of the builders' merchants' market.

August’s BMBI index was 124.7, with one additional trading day. Seasonal category Landscaping was top (142.4) followed by Timber & Joinery Products (129.3) and Ironmongery (124.4). Ten of the 12 categories exceeded 100. The average sales a day index for August 2018 was 117.6.

Sunday, 28 October 2018

Latest news from FMB's State of Trade Survey

Growth among construction SMEs slowed in most parts of the UK in the third quarter of this year, according to the Federation of Master Builders.

Key results from the FMB’s latest State of Trade Survey, which is the only quarterly assessment of the UK-wide SME construction sector, included:

  • Construction SME workloads remained positive in Q3 2018 but grew at a slower rate than they did in the second quarter of 2018;
  • 86% of builders reported increasing material prices in Q3 2018, up from 76% in Q2 2018;
  • More than two-thirds (68%) of construction SMEs are struggling to hire bricklayers and 59% are struggling to hire carpenters and joiners;
  • More than half (58%) of construction SMEs expect salaries and wages to increase over the next six months.
Brian Berry, Chief Executive of the FMB, said: “Growth among the UK’s construction SMEs slowed in the third quarter of this year. A range of factors are at work here, not least ever-increasing material prices. Anecdotally, we are hearing worrying reports of banks withholding previously agreed funding for projects which is delaying start dates and dampening growth.

“This may or may not be related to Brexit-nerves. The construction skills shortage is also taking its toll. More than two-thirds of construction SMEs are struggling to hire bricklayers – brickies are easily the most sought-after tradespeople in the building industry currently. These latest figures match the highest we’ve noted since records began a decade ago.

“These skills shortages are also leading to projects being stalled because there physically aren’t enough people to build them. Worse still, the scarcity of trades means that when construction employers can find people, they are paying huge salaries which is putting further pressure on margins.”

“This slowdown in growth should ring alarm bells for the UK Government and give rise to a total rethink of its misguided post-Brexit immigration proposals. Currently, the Government wants to significantly limit the number of construction workers coming into the UK post-Brexit, labelling them ‘low skilled’ and therefore somehow surplus to requirements. Migrant construction workers are indispensable with 13% of our construction workers being from outside of the UK. If construction firms are unable to hire migrant workers post-Brexit, the already severe skills crisis will worsen. This will mean we won’t be able to build the new homes the Government is keen on delivering and infrastructure projects will grind to a halt.

“It is imperative that the post-Brexit immigration system allows construction firms to continue to hire workers of varying skill levels. We hope the Government heeds the warning that these latest results show before it is too late.”

Monday, 22 October 2018

New team for Builders' Merchant Federation's Young Merchant Group

Glenn Paddison, Branch Director at MKM Building Supplies is the new Chair of the Builders’ Merchants Federation’s Young Merchant Group.  He will be supported by Jo Callow, Merchant Sales Support Manager at Knauf Insulation, who was elected to replace Paddison as the Vice Chair.

Paddison takes over from Victoria Fiddies of Catnic who has just completed her two-year term as Chair.

Paddison and Callow took up their new roles following the BMF Young Merchant Group’s first Conference which was held at the NEC during National Construction Week in October.

The Conference, organised as part of the BMF’s Anniversary Year, was a great success, attracting 150 delegates drawn from current, past and potential Young Merchant Group members.  Highlights included keynote speaker George Clarke, the architect, television presenter and campaigner, who not only spoke passionately on the need to attract more young people into the whole construction industry including the building materials sector, but also voiced some ingenious ideas to help overcome the country’s housing shortage.

Membership of the BMF Young Merchant Group is open to merchants and suppliers aged between 21 and 40 holding a key management position within their organisation.  The Group meets twice a year in the autumn and spring, and also organises an annual trip overseas.

As well as offering opportunities to network and share experience, the meetings regularly feature one or more speakers to encourage and inspire members.  Another Conference highlight was the lively Q&A session following an Industry Forum led by Peter Hindle MBE, BMF Chairman, Andrew Harrison, Deputy CEO P&H of Travis Perkins, David Kilburn, Executive Chairman of MKM Building Supplies and Steve Durdant-Hollanby, MD of Alumasc Water Management Solutions, himself a former member of the Young Merchant Group

Paddison and Callow are keen to continue developing the BMF Young Merchant’s work and influence.

Paddison said: “I am honoured to have the opportunity to take on the role of Chair and would like to thank everyone who voted for me as well as MKM Building Supplies for supporting me in taking up this role. I would also like to thank Victoria Fiddies for her excellent leadership during the last two years.  I’m looking forward to working with Jo to broaden the Group’s scope even further.  I believe there is more to achieve through the BMF Ambassador programme to promote careers in our industry to school and college leavers and this group is in a great position to take a leading role in that.  I can also see an opportunity to strengthen our ties with European merchants to learn from their experiences and share best practice, perhaps in the form of a European Conference.”

Commenting on her appointment as Vice Chair, Callow, said: “I’ve been a passionate and committed member of the group for five years and the interaction has definitely helped me as I’ve progressed my career.  As a keen advocate for women in our industry, I’m delighted that I will be continuing the strong and encouraging female presence following Vic’s term of office and look forward to working with Glenn to take forward the baton to continue to grow the group and deliver quality events.”

Callow was also pleased to announce that Knauf Insulation will host the BMF Young Merchant overseas trip in 2019, which will tour the company’s manufacturing facility in Toulouse as well as visiting French builders’ merchants.

Monday, 15 October 2018

BMJ Industry Awards 2019 – Nominate Now!!

We are pleased to let you know that nominations are now open for the BMJ Industry Awards 2019.
Click HERE to nominate your favourite merchants, supplier brands, trainees, showrooms and industry people.
The awards celebrate the very best brands, merchants and people at the heart of the builders’ merchants sector.
This year the Showroom category has been split into two: Merchant Kitchen and Bathroom Showroom of the Year and Merchant Showroom of the Year, while Timber Merchant of the Year is a new category alongside the new ‘Diversity Award’. This will recognise a company that has demonstrated the conscious removal of bias and barriers and introduction of initiatives designed to encourage positive change and development throughout the business. These new additions will join the existing merchant categories Brand accolades and the individual awards.
Companies and individuals are invited to submit an entry for themselves, or to nominate other companies. Full criteria for all categories can be found on the refreshed BMJ Industry Awards website, along with the simple online entry and nomination form.
The winners at the BMJ Industry Awards luncheon, taking place in the heart of London in May 2019.
The event is supported by heavyweight industry names including Knauf Insuation, Hanson Cement, Rockwool and Lakes Bathrooms.
There is a range of sponsorship packages available to support the awards. For more details email Editor-in-Chief Fiona Russell-Horne at frussell-horne@datateam.co.uk

Sunday, 7 October 2018

Construction growth slips to six-month low as Brexit concerns hit

The IHS Markit/CIPS UK Construction Purchasing Managers’ Index slipped to 52.1 in September, down on 52.9 in August and against the neutral 50 reading. However, still showing growth.

Civil engineering was the worst performing sub-category, and while housing and commercial construction increased at a solid pace, the index signalled the weakest upturn in output for six months.

Delivery times for construction products and materials continued to lengthen and intense supply chain pressures were attributed to stock shortages at vendors and stretched transportation capacity. However, the downturn in vendor performance was slightly less marked than the three-and-a-half year low seen in August.

There was a sharp and accelerated increase in average cost burdens in September, with the overall rate of input price inflation the fastest for three months. Respondents widely cited higher fuel prices and greater raw material costs, particularly timber.

The degree of positive sentiment reported by respondents was the second-lowest since February 2013, amid political uncertainty and investor concerns about Brexit.

Duncan Brock, group director at CIPS, said: “A cause of this malaise pointed to increased cost burdens with both fuel prices on the rise, and acute shortages in raw materials, as supplier delivery times have lengthened to an extent not seen since 2015.”

Tim Moore, associate director at IHS Markit, said: “Construction companies continued to note that political uncertainty acted a key drag on decision-making, with Brexit worries encouraging a wait-and-see approach to spending among clients. The main areas reported as likely to see a boost in the coming year were construction work related to large-scale energy and transport projects.”