Good Product Availability Reflects Industry Slowdown Says PAG

THE FINAL report of the year from the Construction Leadership Council’s Product Availability Working Group (PAG) says there is little change with good availability across all products and regions.

There are no reported supply issues in the electro-technical sector, despite strong activity in renewables-related projects and wider demand for semiconductors. Similarly, insulation products used in energy-efficiency-related work, along with other RMI products such as plasterboard and render, are all in plentiful supply.

There are ample stocks of bricks and blocks on the ground though production levels are likely to reduce following the annual Christmas break and winter maintenance periods.

Product stocks for cement, concrete and aggregate along with Ground Granulated Blast Furnace Slag are likewise healthy.

Finally, there are no concerns over current availability of structural wood products. The group does warn that buyers should continue to apply due diligence on those wood products originating in Russia and Belarus which are subject to UK and EU sanctions. This includes products like Birch Plywood which may be manufactured from Russian raw wood materials in countries like Turkey, Kazakhstan, Vietnam or China.

Product Availability Reflects Industry Slowdown

The good levels of product availability reflect the slowdown in activity across key construction sectors that has reduced product demand. This is most apparent in the housing related sectors, where few expect to see any real upturn until 2025.

Manufacturers are challenged in such market conditions to manage capacity levels. Many are reducing supply to meet demand and some have mothballed factories. The challenge in the coming year will be to avoid availability issues and respond quickly when demand inevitably picks up, says the CLC.

Growing problems of contractors’ cash flow and liquidity in certain sectors are highlighted. Customers paying more slowly, rising wage bills, squeezed margins, and difficulties obtaining credit insurance were all raised as issues of concern. Energy intensive manufacturers (for example, insulation, steel, bricks and glass) also remind that industrial energy costs remain three times higher than pre-Covid levels.

Higher Shipping Costs

Regarding logistics, key shipping routes via the Panama Canal and Suez Canal are experiencing disruptions – caused by a drought and the Israel/Hamas hostilities respectively – leading to delays, re-routing and higher costs for various imported goods, though the impact on construction produces is as yet difficult to ascertain. Both situations are being monitored by CLC.

Looking ahead to 2024, PAG members are hopeful that government, as the largest client of construction services in the UK, will fully use budgets to improve ‘levelling-up’ and energy efficiency measures.

CLC says that government can boost industry confidence and certainty by clarifying key policies such as the Future Homes Standard, UKCA Marking, the Building Safety Act, and the National Infrastructure and Construction Pipeline.

Finally, PAG says the group is unique in bringing together senior personnel from across the industry. Their discussions extend beyond product availability to incorporate far broader issues affecting the construction supply chain. To reflect the true nature of discussions, from January 2024 the group will be renamed the Material Supply Chain Group.

The statement comes from John Newcomb, CEO of the Builders Merchants Federation and Peter Caplehorn, CEO of the Construction Products Association, co-chairs of the Construction Leadership Council’s Product Availability working group.

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