Construction & Concrete Industry Trends – June 2023
As specialist recruiters, working exclusively within the construction and concrete industries, we take great pride in having our fingers on the pulse of these industry sectors. We believe that staying ahead of concrete industry trends is of crucial importance. Therefore, when the Mineral Products Association published their Regional Overview of Construction and Mineral Products Markets in Great Britain Report we were intrigued and thought we could add our knowledge of current construction and concrete trends to a summary of the report’s contents to provide a holistic view of the state of these industries, with the help of a few other sources that support the changes we’ve been seeing.
Concrete Industry Trends
Report Relevance
The Report forecasts likely regional demand across the UK for mineral products over the next 5 years (2023 to 2027).
Who is this concrete industry trends report essential reading for?
- Producers of precast and ready-mixed concrete,
- Construction planners who need to understand the availability of products to meet their demands.
Whilst we witnessed growing construction output in the first half of 2022, the growth steadied and slowed in the second half of the year. This was as a result of cost pressures associated with energy, materials, and labour, interest rate rises and doubts over the resilience of the UK economy. These factors culminated in clients being hesitant to sign off on new projects. Accordingly, demand for mineral products and therefore concrete products reduced, with the first signs being witnessed in June 2022.
Stockpiling
The report states that last year, primary aggregate sales dropped by 8.2%, asphalt by 6.5%, and ready mixed concrete by 3.8%. In 2022, some producers stockpiled products, as they adjusted to a reduction in demand and adjusted their supply chains to post-pandemic conditions. The only benefit of this was that this helped slow the inflation of the price of materials.
The only exception to the decline in demand for products was in mortar, where demand was up by 3.5% compared to 2021, driven by a robust-at-the-time housing market.
Forecast for 2023
The Construction Products Market Association forecasts an overall 4.7% decline in construction output for 2023, followed by a modest 0.6% recovery in 2024. The 2023 decline is based upon the reduction in private housing output due to tightening financial conditions reducing the number of potential house buyers and major housebuilders warning that there will be fewer land acquisitions and fewer site openings. Commercial construction output is also forecast to reduce as investment in new offices and retail premises is likely to remain weak. Whilst we are seeing several house-building companies opening new plots, we don’t expect to see huge growth over the summer especially as interest rates continue to rise, reducing many consumers’ ability to secure a mortgage on reasonable terms.
Market Recovery/Stabilisation in 2024
The modest recovery in construction output forecast for 2024 (to stand at 0.6%) is based upon the fact that whilst there is a steady pipeline of construction projects, these still remain vulnerable to cancellation, delivery issues centred around securing planning consents and economic and budgetary concerns.
The net result of this is that UK sales volumes of primary aggregates and ready mixed concrete is expected to fall in 2023 by 3% in 2023, 4% for asphalt and 8% for mortar. This slowdown is expected to see sales fall below their pre-pandemic levels of 2019. However, demand is expected to slightly pickup in 2024. If these forecasts are accurate, producers of mineral products, construction companies and labour suppliers must all be patient whilst waiting for the prevailing economic trends to settle and stabilise. Due to the macro nature of these events, predicting when, or if stability will return to these market sectors is difficult.
Diversity In Hiring
Another continuing trend that we have seen from our network is a growing demand for greater diversity within the workforce, where suppliers are increasingly being asked to provide diversity reporting data. More and more businesses are getting serious about the benefits that a diverse workforce can being these include:
- Over 43% of companies with diverse management report higher profits.
- 73% of companies with gender equality practices have higher profits and productivity.
- Companies with racial and ethnic diversity are 36% more likely to outperform their peers.
With these benefits, and more it is unsurprising that more and more companies are seeking to become more inclusive within their workplaces, and slow but steady process is being made. An example of this is that Women are said to make up 15% of the construction workforce, This figure is up by 2% from 2022. There are also now several schemes devoted to helping foster women into construction, such as the Women in Construction scheme that is supported by several major housebuilders including Bellway and Redrow Homes
Sustainability and the Construction and Concrete Industries
Both the Construction and Concrete industries are notorious for being energy and emissions-intensive, however, companies are increasingly becoming more focused on doing what they can to limit their impact. The government is leading the way by mandating new sustainability goals via Construction 2025, aiming to cut down emissions in the built environment by 50% by 2025. The government is using its influence to mould UK industries into becoming world leaders in low-carbon and green construction exports. The construction and Precast Industries must therefore adapt by changing supply chain and production processes to make them more efficient, and to make materials cheaper and easier to procure.
Whilst this is an ambitious goal, we have seen huge returns in efficiency for our clients. In fact, those that have elected to use our labour supply chain software called Engage, have reported a 25% cost saving across the business by reducing labour overspend, among other benefits – See our Engage platform for more information.
Conclusion
Overall, the Regional Overview of Construction and Mineral Products Markets in Great Britain Report serves as a timely reminder that whilst there is a strong interdependence between mineral product producers and the construction industry, economic influences remain the greatest threat to not only an upwards trend in sales volumes of mineral products but also achieving the Government’s construction policy objectives. However, moving forward, both the construction and precast Industries must not only navigate the fluctuating economy but also maximise efficiencies within their supply chain and production processes whilst reducing their overall emissions. To assist with worker shortages why will need to not only embrace diversity to encourage new talent.
Contact Us For More Information
If you have any questions or queries regarding this article or want to speak to our concrete specialists contact us on 0115 9400 968 for more information.
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