Taking a broader look at the UK construction market, not just through builders’ merchants, the latest report by the Mineral Products Association shows demand for heavy-side construction products fell in Q3 2017 across all materials except for mortar, compared with Q2 2017 and the same period in 2016. This is the second consecutive quarter of decline for aggregates and ready mixed concrete (RMC), and the third for asphalt. These sluggish sales figures provide further evidence of a weakening in general construction activity since the middle of the year.
Demand for mortar increased by 1.6% in Q3 2017, compared to the previous quarter, supported by strong housebuilding. But sales volumes were down 1.1% for aggregates, 1.8% for RMC and 2.9% for asphalt, with a notable decline in road maintenance activity in Scotland. Continued reductions in RMC sales, notably in London, can be directly attributed to weaknesses in commercial office building as the political uncertainties around Brexit continue to erode developers’ confidence.
In addition, delays to large infrastructure projects such as the new Hinkley Point C nuclear power station and some big motorway upgrade schemes are adding pressures to our markets and making it a bumpy ride for those who are heavily dependent on publically-funded projects. The Government must take action and commit to infrastructure to keep construction and the economy stimulated.
However, although our markets are perhaps not as good as expected, it’s important not to talk ourselves into recession. There are green shoots. For example, the £4.2bn investment in the Thames Tideway Tunnel – London’s super sewer that will take several years to complete – will help boost volumes. There are also opportunities for businesses that move with the needs of the market: adopt digitalisation, and continue to invest in product development and in service to customers.
The 2008 downturn challenged many businesses, but it also encouraged organisations to look at their operations and strip out cost. Many came out of recession leaner and more focused, and I believe our industry is now in a stronger position to ride out the current squalls and adapt to future challenges.