Knauf Insulation comment: Q4 2017

John Sinfield, Managing Director Knauf Insulation is BMBI’s Expert for Mineral Wool Insulation.

In 2017, the housebuilding industry came under greater scrutiny than ever before: the housing shortfall, the industry’s much discussed skills gap and the ability of young people to buy their first homes. It was also a year when policy focus seemed to take a new direction, moving away from demand-led to supply-led solutions. This was underlined by the Chancellor Philip Hammond in his November Budget, where he committed £15bn of new support to the sector, with particular help aimed at smaller builders and developers.

These supply-led solutions, coupled with existing schemes aimed at stimulating housing demand – the most high-profile being Help to Buy – will drive the market forward in 2018. Those of us in the building products sector should expect increased housebuilding momentum to continue to drive sales.
On the commercial side, it would be remiss of me not to mention the impact that the collapse of Carillion will have during the coming months and even years. The reverberations will be felt throughout the supply chain, right through to building product manufacturers.

A key issue raised by this event is the sustainability of contractors’ margins. In a market environment where major contractors are required to feed the top line by focusing on aggressive bidding and winning contracts on poor margins and terms, it only takes a couple of hiccups on projects or payments for businesses to fail.

Sadly, we have not even begun to see the full impact of Carillion’s failure through the supply chain. This ‘race to the bottom’ mentality is a problem for the entire construction supply chain that must be addressed for our industry to prosper. I hope that 2018 will see us all take some steps forward in this area.

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