With both Brexit and Covid-19 issues still very much with us, 2021 will continue to be a challenge for all businesses. Both the ‘State of the Trade’ survey from CAB and the recent CPA (Construction Products Association) forecasts do offer cautious hope for the year ahead.
CAB’s 2020 final quarter ‘State of the Trade Survey’ showed a distinct caution within the fenestration industry compared to the wider construction industry. CAB’s survey is taken from its membership and the results benchmarked against the wider construction industry by the CPA. Normally CAB members fare much better, or are more optimistic than that of the general construction industry, but the last report of 2020 offers an interesting insight.
Members historic sales, which reflects the fourth quarter 2020 against the third quarter 2020 only 36% of the CAB membership, on balance, said that their sales had increased compared to 85% on balance of the wider construction industry. Looking forward to the first quarter 2021 on balance only 32% of CAB members expected sales to increase, whilst 48% on balance of the wider construction industry expected sales to increase. The change could be reflecting the delay in which the supply of aluminium fenestration follows some time after building starts on site. The year ended with a net balance of 14% of CAB members suggesting that sales volumes had reduced in the previous year.
The main driving factor for CAB members remains the costs of materials and obviously the exchange rate, as much of the UK’s aluminium is imported. Looking forward as you would expect 62% of CAB members suggested that the demand for product would be the likely constraining factor in business for the next 12 months, reflecting the conservative figure in both reported historic and expected sales forecasts.
Looking at capacity utilisation and companies that are operating at over 90% of capacity, less than 50% of CAB members suggested they were running at this level and there does not seem to be an expected improvement in the year ahead. The wider construction industry is faring a little better, but the restrictions imposed by the Covid-19 outbreak continue to make business difficult for most.
On balance 27% of members have indicated that labour costs during the last year have increased and on balance 64% of members expect that there will be further increases in cost in the year ahead. Both historic and expected costs remain higher than that of the wider construction industry.
Encouraging to see is the capital investment from CAB members in the year ahead, on net balance across all capital assets, is set to double in the year ahead suggesting confidence in the coming months.
Overall, the CPA’s main scenario anticipates that construction output in 2021 will rise by 14.0% with the largest growth rates in 2021 expected to be in infrastructure at 32%, public housing rm&i at 21% and industrial construction by 19%. The CPA’s main scenario for 2022 anticipates that construction output rising by a further 4.9% with the largest growth rates expected to be in public housing of 10.0% and industrial construction of 8.5%. Obviously these figures are based on combating the Covid -19 virus as one of the main restrictions we currently face.
In fenestration circles, whilst commercial new build and refurbishment outlooks may be a little cautious, there is a possibility that the home improvement sector could bounce back after the current lockdown as it did for the first lockdown in 2020. With homeowners looking to spend capital, capital not spent on holidays, in improving their homes and property, these improvements often include replacement windows and doors. Whilst still far from the most widely used fenestration material in the UK today, aluminium continues to grow and is arguably the material of choice for the homeowner given its affordability.
Published quarterly, the state of the market survey is open to CAB members to contribute and offers businesses a unique insight to the fenestration sector. Despite the pandemic, it is business as usual at CAB and staff are on hand at the offices and working remotely to answer any aluminium fenestration related questions. Information is regularly updated on the CAB website at www.c-a-b.org.uk. For Association Membership enquiries, please contact Jessica Dean at the CAB offices by email email@example.com or telephone 01453 828851.
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