More construction jobs will go
Published: 20 April, 2009
LONDON: The sale of construction products is expected to decline further over the coming months, leading to more job losses and continuing gloomy conditions, according to the latest Ernst and Young/Construction Products Association Activity Barometer.
Around 60 000 jobs have already been lost to the industry with a further 9000 losses announced in the last three months, but this latest prediction is expected to result in even more job losses over the coming months.
The survey records a new low, giving an overall score of just eight for the first quarter of the year against a 50 mark representing ‘no change’ and contrasts dramatically with a score of 80 less than two years ago.
Commenting on the results, Noble Francis, economics director for the Construction Products Association said: “Heavyside manufacturers are indicating the severest conditions, recording an unprecedented score of zero for the last three months as their sales continue to decline.
“The future picture also shows that virtually all manufacturers are expecting sales to carry on decreasing as the recession continues
“Lightside manufacturers are enduring sales falls, albeit it from a higher base, but they too are now predicting a very gloomy few months as their figures are expected to match those that the heavy side is currently experiencing.”
Dominic McAra, a director in Ernst & Young’s Construction Products team added: “The last quarter has been particularly tough for Construction Products companies. The recession, coupled with the coldest winter for several years, has adversely impacted sales and cashflows.
“It will be the companies with strong cash reserves that will find 2009 the least painful and it is no surprise that a number of the larger companies in the sector have had – or are contemplating – rights issues.
“The next six to nine months is likely to see companies aiming to maximise liquidity and to ensure that they keep within their banking covenants. This will almost certainly result in further restructuring in the sector.
“For companies of all sizes keeping control of debtor and inventory levels in a sector where demand is uncertain is going to be a significant challenge for management.
“Whether the continuing downturn ultimately provides opportunities for the stronger companies to re-commence the sector consolidation will depend on the speed at which confidence returns.”