INDUSTRY REPORT increase the price of their products or reduce their profit margins , which will have an adverse effect on market growth ,” added the report .
With an increase in cost of raw materials , vendors increase the price of their products or reduce their profit margins , which will have an adverse effect on market growth
Counting the cost
The UK construction industry was severely impacted in 2020 , due to the disruptions caused by the COVID-19 outbreak and subsequent lockdown measures . The industry contracted by 14 % in real terms in 2020 , following growth of 1.8 % in 2019 . According to the UK Office for National Statistics ( ONS ), the construction industry contracted by 1.2 % year-on-year ( YoY ) in the first quarter of 2021 , following year-on-year ( YoY ) declines of 5.9 % in Q4 , 10 % in Q3 and 36.2 % in Q1 2020 .
“ Recently , there have been major economic changes that are impacting the world . As a result of the COVID-19 pandemic and Brexit , combined with the ongoing crisis between Russia and Ukraine , we are currently seeing cost-of-living price increases , national insurance increases as well as unprecedented change in the level of volatility in commodity and energy prices ,” commented Ken Parkin , Chair , Construction Alliance North East and Matthew Wharton , Director , Wharton Construction , in the UK .
“ British Steel will increase the prices of structural sections for all new orders by £ 250 / t , with immediate effect . For Construction Alliance North East ’ s ( CAN ) regional SME members , this represents almost a 10 % overnight cost increase . The impact on the construction industry is enormous . CAN ’ s regional SME members have been impacted greatly , for example on two relatively small projects this resulted in an immediate cost increase of circa £ 20,000 per project and the member company is currently unable to pass this onto clients due to fixed price contracts ,” they continued .
“ We are aware that steel and other material costs will continue to rise , and so we are calling on the UK Government to provide as much support as possible to regional SMEs , as well as for clients , material suppliers and merchants to share the risk with both main and subcontractors . CAN , in conjunction with CECA , have arranged a North-East Summit to address the wider issue of material price increases and extended delivery periods . This burden will be felt throughout the construction industry , and so we want to make sure we are able to maintain high levels of activity , regardless . We would also like to thank our members for their ongoing support in such turbulent times ,” they concluded .
According to the report entitled " Construction in the United Kingdom ( UK ) - Key Trends and Opportunities to 2025 ( Q2 2021 ),” published in July 2021 , the country ' s construction industry was expected to grow by 10.6 % in 2021 and record an average growth of 3 % between 2022 and 2025 . The industry ' s output will be supported by improving investor confidence and investments in transport , renewable energy , residential and commercial infrastructure projects .
Electrical steel and equipment
Engineering and construction costs rose again in February 2022 , recording their sixteenth consecutive monthly increase , according to IHS Markit and Procurement Executive Group ( PEG ).
February 2022 also marked the eighteenth consecutive month of rising shipping costs .
“ Due to these rising shipping costs and limited freight availability , many other sub-indices for components have maintained price increases as well . The sub-index for copper-based wire and cable prices rose again from 73.3 points in January to 79.2 this month . The electrical equipment sub-index also rose from a reading of 78.6 in January to 81.8 in February . The sub-index for transformers came in at a level of 77.3 in February , although this result is lower than the 78.6-point index peak this past December ,” commented the analyst .
Due to these rising shipping costs and limited freight availability , many other sub-indices for components have maintained price increases as well
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