Steady growth and optimism
CAB chief executive Justin Ratcliffe looks at the association’s latest Q3 State of Market Survey and notes that the steady growth forecasts are linked to increasing interest in training initiatives and the CAB Pavilion at FIT Show 2019.
The Q3, 2018 CAB State of the Market Survey demonstrated that members saw a positive marketplace during the quarter. One of the key highlights was that compared to Q2, 41% saw a sales rise of up to 5%, and 24% experienced a rise of more than 5%.
Construction growth over the past year has been driven by private housing, infrastructure and private housing RM&I, which has benefited the whole supply chain. On a year-on-year basis, 12% of members reported sales volumes increases of up to 5%, and 41% reported rises of more than 5%. Highlighting perhaps the lingering impact of a difficult Q1, 24% of members were still down slightly by not more than 5% year on year.
Despite the ongoing economic and political uncertainties relating to Brexit, product manufacturers remained optimistic for the next 12 months in Q3. 41% (59% in Q2) of members forecasted sales growth over the next quarter and 41% (76% in Q2) predicted growth in the 12 months ahead.
Demand was again reported as the key constraint on sales growth over the next year for 69% of members in (53% in Q2). The other constraints were capacity at 13% of respondents, and no constraints (13%).
In Q3, 76% of members’ net balance (91% in Q2) reported unit cost increases over the previous 12-month period. Looking ahead, members’ cost pressures were expected to continue over the next quarter (71%) and the next year (88%). The key drivers of cost inflation in Q3 were wages and salaries (88%), raw materials (82%), and fuel costs (76%). Cost balances on the whole appear to be easing very slightly from the 2017 peak, but it is worth mentioning the concern about fuel inflation. Since July 2017, the price of Brent crude oil has remained on an upward trajectory and in August 2018 reached a four-year high of $78.9 per barrel.
In the year to Q3, capacity remained sufficient although 13% of members reported that they had operated at between 90% and full capacity. In 12 months’ time, capacity utilisation was anticipated to be 90% or higher according to 31% of members (35% in Q2).
Once again there was a very positive view of capital investment over the next 12 months. In Q3, product improvement was once again the focus for the year ahead with 63% of members anticipating an increase in this area. Furthermore, balances of 56% and 50% expected to increase investment in plant/equipment and e-business respectively. This was followed by balances of 38% for increased investment in both R&D and property in the year ahead.
On the employment front, in Q3, 56% of members on balance reported that employment rose from a year earlier (47% in Q2). 44% anticipated increasing headcount during the next 12 months (71% in Q2).
CAB has recently established a formal Training Committee which, among other things, has inputted into various new Trailblazer Apprenticeship Standards including fabrication, installation and glass processing.
In addition, work is well underway on a new Trailblazer Standard for Curtain Walling Installation at Level 3. It is hoped that that this could be completed by Q2, 2019.
The CAB Installer/Fabrication Training days involving three full NVQ Level 2 units day are proving popular with 30-36 candidates being registered for training days in November 2018. The units being covered are: Health and Safety; Locating, Handling and Positioning of Materials; Fabrication or Installation of Doors and Windows.
The Installation training days will also cover some elements of basic site surveying and curtain walling, but these will not be assessed. The basic aim of both training days is to increase competency and encourage a culture of training, and successful candidates will receive a CAB Skills Card. The courses are run in conjunction with GQA and Total Support Training.
Training will again be a major feature of next year’s FIT Show 2019 at which CAB will be speaking about its various initiatives. The CAB Aluminum Pavilion located in Hall 20 is continuing to attract interest from members involved in systems, hardware manufacture, powder coating, fabrication, shading devices, weatherproofing and recycling.
The interest underlines the confidence in the FIT Show itself but also the confidence in sales growth and capital investment forecast in the recent Q3 CAB State of Market Survey (above).