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UK joinery manufacturers report increase in sales volumes and anticipate making further investment in their products

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04/11/2015

The BWF Joinery State of Trade Survey Q3 2015 indicated a rise in joinery activity and continuing investment in product improvement and manufacturing equipment. The availability and cost of appropriately skilled labour however remains a burden for the joinery sector. BWF Policy & Communications Executive Matt Mahony commented on the survey findings:

UK joinery manufacturers report increase in sales volumes and anticipate making further investment in their products“Sales volumes have remained healthy on the whole since Q2 2014, although demand is still the most highly ranked constraint on output, just followed by labour availablilty and capacity.

“Raw material costs are still rising, albeit slower than previously, and wages & salaries are having an increasing impact on unit costs. Energy costs however are having little effect on joinery manufacturers and fuel costs also appear to be having much less of an impact.

"Despite the optimism, uncertainty remains over whether the UK construction industry has the skills to match demand – the latest government proposals on an apprenticeship ‘levy’ need to work for the industry – and there are also ongoing concerns over whether the government's housing policy has been effective in delivering the houses the country needs, as noted in the Construction Trade Survey.”

The CPA’s latest Construction Trade Survey also showed a rise in construction activity, for the tenth consecutive quarter in Q3.  This growth was reported by firms across all areas of the industry, from building contractors and SME builders to civil engineers and product manufacturers.

Commenting on the survey, Dr Noble Francis, Economics Director of the CPA, said,

“Firms across the whole construction supply chain reported rises in output during Q3.  Although activity appears to have slowed down, SMEs, civil engineering firms and product manufacturers remain optimistic about the near-term outlook.  On the downside, building contractors reported an across-the-board decrease in new orders during the quarter, particularly in the public housing sector.

“A downturn in public housing work is was expected, given the proposed changes to housing benefit, Right to Buy and social rent cuts in the July Budget.  Of more concern is the fall in new orders in private housing and commercial, which have driven the construction recovery over the last two years.

“Although the overall outlook is largely optimistic, the impact of a shortage of skilled labour continued to manifest itself, not just in difficulties recruiting bricklayers and other on-site trades, but in rising wage bills. In Q3, labour costs were higher for 75% of building contractors, 93% of product manufacturers and 44% of SMEs. Increasing activity over the next year threatens to make these labour supply issues even more acute.”

 

Key points from the BWF Joinery State of Trade Survey Q3 2015 include:

– A balance of 62% of joinery companies reported an increase in sales volumes for Q3 2015 compared to the previous quarter. This follows on from 39% of joinery companies reporting an increase in sales volumes in Q2. Sales volumes results showed a balance of 65% of respondents reporting an increase over the past year.

– Manufacturers were confident that sales volumes would improve in the next quarter, with a balance of 50% predicting an increase for Q4 2015, and a balance of 63% predicting an increase over the next year.

– 67% of respondents had been using more than 70% of their manufacturing capacity in Q3 2015, compared to 56% of respondents over Q2. 70% of respondents indicated they would be using over 70% capacity over the next quarter, and 73% over the next year.

– 63% of respondents noted an order book between 1 and 3 months, with 4% of respondents reporting an order book extending beyond 3 months.

– Demand was listed as the likely constraint on activity over the next year by 38% of respondents (up from 24% in the Q2 responses), with labour availability up to 31% from 24%. Capacity availability was listed by 23% as a likely constraint.

– 42% of respondents on balance anticipated increasing their labour force over the next year, with 77% of respondents on balance anticipating increased labour costs.

– Wages/salaries increased for 77% of respondents on balance, with raw material costs reported as having the next highest increase at 54%.

– Respondents were split on whether energy costs had been a factor in increasing or decreasing unit costs, and a balance of 50% of respondents reported a drop in fuel costs.

– Investment in product improvement had been increased by 43% of companies on balance over the next year, with a balance of 53% having boosted investment over the previous year.

– 54% of respondents on balance were planning to boost manufacturing equipment spending with 63% having increased spending over the previous year.

– 58% of respondents on balance had invested in improving their products over the past year with 48% investing in their plant/equipment.

– Investment in product improvement and manufacturing equipment and was also set for the highest capital investment change over the next year, with a balance of 62% and 44% respectively planning for increased investment.

– A balance of 15% of respondents had increased their investment in property, with 41% set to increase it for next year.

BWF members can log in and download the survey results: www.bwf.org.uk/publications/market-research

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