Andrew Simpson, Packed Products Director Hanson Cement is BMBI’s Expert for Cement & Aggregates.
Quarter 2, 2020 will be remembered and talked about for years to come as the UK went into full lockdown due to Covid-19. Business leaders were faced with tough decisions which had to be made quickly, with mixed advice from the Government.
Businesses quickly closed different parts of their operations and adapted their organisations to stay afloat. Many utilised the Government furlough scheme and ran with limited resource to match vastly reduced sales.
Due to the pandemic and resulting level of site closures demand for aggregates, concrete, asphalt and mortar dropped significantly quarter on quarter. The Mineral Products Association (MPA) reported that the level of decline in Q2 was equivalent to the total market decline during the financial crisis over the period of 2007 to 2009.
It was some time before government guidance for the construction sector was made clear. The message eventually received was that construction is essential so if it was safe to operate we should carry on.
As builders’ merchants reopened, they saw a dramatic shift in demand towards heavyside products as people on furlough started home improvement projects. We saw spikes in demand for packed cement, post fixing products, bagged aggregates and decorative aggregates throughout the quarter. Demand for some product lines has been unprecedented with all manufacturers implementing an allocation approach to supply.
Merchants have seen a swing towards cash sales as consumers spent heavily on improving their homes rather than eating out or going on holiday. Many people who have been working from home have converted spare rooms and installed garden buildings to enable them to work comfortably. This may continue into next year, with many firms indicating that they want to reduce travel to the office as people have adjusted so well to home working.
Given everything that has gone on throughout the pandemic including some new local lock downs it is very difficult to predict and plan for 2021. The Prime Minister has made it clear that the construction sector is key to recovery and will be keen for housebuilding and infrastructure projects to recover quickly.