Monthly Email News for the Architectural Aluminium Industry

2018: Confidence in growth despite uncertainty
January 2018

CAB ceo, Justin Ratcliffe, considers the latest State of the Market Survey results for Q4, 2017 and looks ahead to the Association’s 2018 key events programme

The latest Q4, 2017 CAB State of the Market Survey highlights growth prospects have strengthened for the year ahead with 79% net balance of members expecting sales growth in 2018 compared to 56% in Q3. This is impressive as it is set against a background of ongoing economic and political uncertainty relating to Brexit.

Annual consumer price inflation was 3.1% in November, up from 3.0% in October and 95% of members reported increases in Q4, compared to 87% in Q3, while 50% and 61% anticipated costs pressures to remain elevated in the next quarter and year ahead respectively. In line with the recent Markit/CIPS data, these strong cost pressures continued to persist due to the delayed impact of past Sterling depreciation and rising global commodity prices. It is worth noting that in Q4, the Sterling/Euro exchange rates depreciated (in annual terms) for an eighth consecutive quarter. In December, the price of Brent crude oil rose 18.8% year-on-year to a three year high of $64.2 per barrel. Together these issues have increased costs for fuel (53% net balance) and raw materials (89% net balance) amongst members. Wages & salaries (79%) was also noted as a key driver followed by energy costs (47%) and exchange rates (44%).

Labour costs were still anticipated to increase over the next quarter (68%), which was comparable to Q3 (69%) but showing an anticipated fall in the year ahead (63%) compared to Q3 (88%).

It is perhaps a concern that capacity utilisation remains low. The proportion of members operating at over 90% capacity for Q4 (16%) was very similar to Q3 (13%), while for the year ahead it slightly improved to 26%, compared to 20% in Q3.
Demand was again reported as the key constraint on sales growth over the next 12 months, 63% net balance (same as Q3), with labour availability (11%) and capacity (11%) ahead of material supply, raw material prices and no constraints (all 5%).

Capital investment again remained one of the key priorities with the focus over the year ahead being plant & equipment (72%) followed by product improvement (67%), R&D (56%), e-business (50%) and property (44%). Encouragingly, across all the capital investment there was a view that investment would increase year on year across all the metrics with exception of R & D which would be the same (39%) as the past year.

CAB Programme 2018

The programme for 2018 will soon be underway with the first Regional Members’ meeting due to take place in Leeds City Centre on Thursday 8 March 2018. The mini-conference will take place at the Carriageworks in Millennium Square, Leeds and the dinner in the Banking Hall at Aspire which is nearby. The format will again be a chaired forum, with senior industry figures across the supply chain discussing topical sector issues.

The CAB AGM and Golf Day is scheduled for Thursday 28 June 2018 at the Forest of Arden Hotel and is always the social highlight of the Association calendar.

We will shortly be launching a new series of quarterly Contractual Awareness seminars for the year ahead which will cover a variety of relevant and topical issues:

1. Post-contract awareness and payment issues
2. Design Liability and pre-contract awareness
3. JCT and contractual amends
4. Claims (liquidated damages) and contractual nightmares

Due to the ongoing success of the seminar series, CAB is looking into making additional short 40 minute presentations accessible to members via webinars.

Details of CAB’s annual Aluminium in Building Conference and its Autumn Regional Meeting will also be announced very shortly.

If you would like more details about CAB, its activities and membership benefits,
please email jessica.dean@c-a-b.org.uk or contact the office on 01453 828851.

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