The most recent BWF State of Trade Survey indicates that continuing uncertainty and tough trading conditions in the joinery manufacturing sector is preventing companies from investing in machinery or additional staffing. With construction output contracting by 2.5% in Q3 despite the economy as a whole growing by 1%, the survey results paint a picture of prudent expenditure and low market confidence, albeit with some respondents anticipating a healthy increase in sales over the medium term.
Key points include:
• The balance of respondents reported a decrease in sales volumes over the last year, but a third of respondents anticipated that sales volumes will rise by more than 5% over the next year
• Capital investment on plant equipment/machinery is predicted to drop for the first time
• Businesses are just as likely to decrease as increase their workforce over the next year
• Product improvement is the most common area of capital investment and, together with R&D, one of the only areas where investment is anticipated to increase.
• High fuel and energy costs – increasing by more than 5% for 40% and 44% of respondents respectively – continue to push up unit costs.
The BWF’s results tally with those of other industry associations, as findings from the NSCC survey see specialist contractors constricted as the construction contraction continues.
The Q3 NSCC State of Trade Survey indicated a significant fall (44%) in the number of orders following on from a low number of enquiries received in the previous quarter. Almost a third of Specialist Contractors anticipated a decrease in workload in the next quarter, although this is not unexpected at this time of year with the industry preparing to shut down for the Christmas period. As with the BWF survey, the medium term outlook into 2013 appears to be more positive with over a third of Specialist Contractors expecting an increase in workload and around a quarter looking to expand their businesses over the next 12 months.
Broader industry figures from the CPA indicated that public new housing and public non-housing were the worst hit sectors in Q3, with building contractors reporting falls in output of a balance of 38% and 34% respectively.
Private industrial and private commercial sectors, which remain important sources of work for joinery manufacturers, fell on balance by 29% and 27% respectively, with a balance of 41% of light side product manufacturers (heating & ventilation systems, plumbing, electrical & lighting, doors & windows, kitchen furniture and thermal) reporting that sales fell in Q3.
BWF Policy Executive Matt Mahony commented on the recent findings:
“Joinery manufacturers can be forgiven if their eyes glaze over at reading another gloomy report on the state of the market. We know that the construction sector is capable of delivering housing and infrastructure needs in an environmentally sustainable and affordable way. We know that the timber and joinery sectors can play a crucial role in this, improving the thermal performance of the UK’s existing properties and providing genuine career opportunities in areas of high unemployment. This is of little solace to those joinery businesses delaying investment decisions and considering the merits of restructuring their workforce.
“It is widely quoted that £1 invested in construction generates almost three times that amount in total economic activity, and with such a high proportion of building materials made in the UK, so the sector should be a crucial component of UK growth rather than a drag on it. We hope that the recommendations for a national growth strategy will stimulate focussed support from all parts of Whitehall and, if the government are serious about unlocking the potential of our sector, then they should consider some of the measures we have set out in our recent letter to the Chancellor.”
A wide range of BWF members responded to the survey, with a number of different product types and company sizes represented. Look out for the Q4 survey in the next few weeks.
BWF members will be able to view the full 2012 Q3 report simply by logging in to this page below.
