Anticipation of improved market conditions is encouraging construction product manufacturers to increase capital expenditure and raise productivity according to the latest Construction Products Association survey.
The association’s economics director Alan Wilén said: ‘The industry enjoyed a strong start to 2002, with over a third of firms seeing their sales volumes rise by more than 5% on a year earlier. Expectations are high with further growth anticipated over the coming months.
‘The industry is responding to the positive outlook by increasing its capital expenditure in a range of areas that will help improve product differentation and raise productivity. The construction products industry’s optimism and commitment to raise capital expenditure is in sharp contrast to the rest of the UK manufacturing and will offer encouragement to the government’s initiative to raise productivity.’
However, Mr Wilén warns that anticipated rises in output and capital expenditure are firmly based on expectations that government spending will be delivered. ‘Delay in the implementation of promised projects would severely hit both construction growth and companies’ own investment plans,’ he said.
The survey also highlighted significant cost pressures as companies are hit by rising energy costs and additional tax burdens including the Climate Change Levy.
Further tax increases loom with the Aggregates Levy adding to costs from April and the 1% increase in National Insurance contributions hitting firms’ labour costs from next year. The level of the euro remains low and exports continue to fall as increased competition from developing countries has adversely affected export markets.
