AWMS comment: Q4 2017

Steve Durdant-Hollamby, Managing Director Alumasc Water Management Solutions (AWMS) is BMBI’s Expert for Civils, Metal Rainwater & Drainage.

Metal rainwater continued to grow in Quarter 4, with the market up 5% on the previous quarter. Increased demand for colour and bespoke systems, particular in high end domestic and commercial sectors, is keeping this market ahead of the game. Steel rainwater is also gaining ground as both new build and RMI markets recognise the benefits of metal systems for durability, design and performance compared with plastic. So, with the cost of steel similar to plastic rainwater, it’s an easy choice for these projects.

However it is a different picture for civils and drainage, where the market is down 3%, mainly caused by delays in large infrastructure projects and a growing skills shortage. Enquiries are strong, and many companies are busy with quotes and rebidding, but converting enquiries into sales is hard going and new projects are slow to emerge.

Over the last three years, the squeeze on contractor margins has been significant. In 2014 the average top 10 contractor pretax margins were 2.9% according to the Construction Products Association. By 2017 this had fallen to -0.5%. So Carillion’s failure was no real surprise, and it could only have been a matter of time. It may be some months before we really start to feel the impact of its failure, but it has knocked confidence in our sector, bringing it to an all-time low.

However, even in difficult times, there are opportunities to add value and improve margins in civils and drainage with product solutions that deskill installation and combat the skills shortage. Suppliers in all areas of construction are increasingly being asked to devise new product solutions and bespoke systems, rather than standalone products, that make it easier, quicker, better and more efficient for contractors to complete their projects on time and on budget.

The other big opportunity for this market is to think of the aesthetics when developing products. Civils can be sexy and new technology is helping to add value with bespoke solutions that combine practicality and looks.

So while the outlook for the next three to six months is somewhat fuzzy, we expect a slowdown in commercial but the market for civils to improve, mainly driven by the rail and highways sector.

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