ALUMINIUM
New benefits and ‘Member
Focus’ as Q1 Survey reveals
‘very tough ahead, but
capital investment priority’
CAB Chief Executive Justin Ratcliffe looks
at the early impact of Covid-19 lockdown
in Q1, a new communication initiative and
a new tax service member benefit
Capital Investment
Net % Balance (Past/Next Year)
100
80
60
40
20
0
-20
Cost Factors
Past year Next year
53 53
47
47
41
35
38
29
31
25
12
Property
-13
Taxes
0
Wages & salaries
94
Energy costs
44
Fuel costs
0
Exchange rates
20
Raw materials -6
-20 0 20 40 60 80 100
Net % Balance of Respondents
Expected Unit Costs
Plant / equipment
Customer research
R&D
Product improvement
E-business
» FOLLOWING THE CORONAVIRUS
(COVID-19) outbreak, data for the CAB Q1
State of Market Survey includes only the first
week of the national shutdown introduced on
23 March. Despite the resulting widespread
site closures and social distancing measures,
50% net balance of CAB members saw sales
volumes grow by over 50% in Q1, 2020
compared to Q4, 2019. Additionally, 6% net
balance saw a growth of not more than 6%
and 6% no change.
Amid the COVID-19 lockdown members’
expectations for the future deteriorated in
Q1 with the forecast sales volumes for Q2
and year ahead showing a 59% and 63% net
balance fall, respectively. This also echoes
survey data from HIS Market/CIPS which
showed that construction activity fell to an 11
year low in March.
Demand was reported by far and away the
key constraint on sales growth over the next
12 months. 81% of members reported this
with labour availability (6%), Capacity (6%)
and Material Supply (6%) the only other
metrics listed. Unsurprisingly, the expected
capacity utilisation was at an all-time low,
with only 6% of members forecasting to be
operating at over 90% capacity in Q2 and 6%
for the year ahead.
The key driver of cost inflation remained
wages and salaries (94%) while raw materials
showed a net balance fall of 6%. Other cost
factors considered were exchange rates (20%)
and energy costs (44%). The recent plunge in
global oil prices has also filtered through to
input prices. No respondents gave fuel costs
or taxation as having any impact on driving
up costs.
The anticipated fall in sales and
construction activity in 2020 combined with
uncertainty around the strength of recovery
from Q3 once lockdown measures are lifted
100
or eased, meant that construction
product manufacturers remained
cautious about hiring in Q1. Employment
intentions for the year deteriorated in Q1 with
29% net balance of members anticipating a
decrease in headcount. This was reasonably
consistent with the wider construction sector
that forecast a reduction of 21%. Members
also expected (12% net balance) wages and
salaries to fall over the next 12 months.
Capital investment however remained
one of the key priorities with e-business the
focus of investment intentions for the next
12 months with 38% net balance forecasting
growth in the year ahead (31% in past year).
There was further positivity with 47% net
balance forecasting product improvement
investment growth in the year ahead along
with 35% (R &D), 29% (Customer Research)
and 12% (plant/equipment). The only
negative balance was for property with a -13%
net balance (+25% in past year).
CAB LAUNCH ‘MEMBER FOCUS’
CAB has launched a new regular
communication ‘Member Focus’ to keep
members fully updated in the current fast
changing environment. Content covers
the latest relevant Covid-19 news and the
Association’s growing programme of webinars
including contracts advice. The newsletter
will also keep members up to speed on
developments surrounding CAB’s Training and
Closed Loop Recycling Projects in addition to
the launch of new member services.
Net % Balance (Next Quarter/Year)
90
80
70
60
50
40
30
20
10
0
12
Quarterly
15
CAB
CPA
NEW MEMBER SERVICES
CAB is pleased to announce that it has
joined the Joint Taxation Committee (JTC)
which consists of representatives from major
trade federations operating in construction as
a means of jointly lobbying on those tax issues
that affect firms in the industry.
The JTC acts a specialist resource to member
trade federations providing a source of highquality
technical knowledge about all the taxes
that apply to construction businesses. It produces
guidance for member federations and their
members illustrating how normal commercial
practice can be monitored and, sometimes
adapted, to allow good tax compliance.
Current issues under discussion with
Government and HMRC are:
• the tax treatment of payments for project
bank accounts
• the levels of penalties experienced for
minor failures in CIS
Members will now have the resources of
telephone support for tax enquiries and also a
monthly newsletter ‘JCT Newsline’.
For Covid-19 Latest Developments please
see the hub on the CAB website at c-a-b.org.
uk/covid-19-updates/overview/ . For more
information on CAB’s webinar programme
c-a-b.org.uk/cab-events-programme/ or
contact [email protected] on
07970 735689.
24
Annual
23
30 » JUN 2020 » CLEARVIEW-UK.COM