Andrew Simpson, National Commercial Director Hanson Cement is BMBI’s Expert for Cement & Aggregates.
Demand for construction products increased in quarter two following the poor start to the year due to the severe weather. The Mineral Products Association reports that seasonally adjusted sales volumes increased by 9.2% for aggregates and by 9.8% for ready-mixed concrete compared to the previous quarter, and by 11.3% for asphalt. Sales of mortar increased 20.9% which demonstrates that the housebuilding sector continues to be strong compared with other channels.
Although we’ve seen a welcome increase in activity, it’s tempered by the fact that sales volumes of asphalt, aggregates and ready-mixed concrete are lower on an annual and half-year comparison. Mortar again bucks the trend and merchants should benefit from the continued growth in housebuilding activity. The Office for National Statistics (ONS) also reports a slight increase in RMI activity in June, which is also good news for merchants. Interestingly, the ONS also says the increase in construction output in June was mainly attributed to growth in infrastructure.
There are still some choppy waters ahead for our sector due to underlying issues with consumer confidence. Despite unemployment being down and salaries growing slightly more than inflation, consumers still seem reluctant to spend at previous levels. The experience of High Street retailers reflects the issues we face too. Rising energy and distribution costs will be affecting manufacturers with energy intensive operations.
The longer-term issue that the industry needs to address is the shortage of skills and labour we could see as Brexit kicks in. Will government apprenticeship schemes attract people to the construction industry? The Department for Education states that there were 21,210 new apprentices in the construction, planning and built environment sector. That’s 2.1% of all new apprenticeships that academic year. Given the number of people employed in construction – getting on for 10% of the workforce – this seems a very small proportion. If we are to meet future construction demand and forecasts the industry needs to do more to address the ageing workforce and skills shortages.