The sale of construction products is expected to decline further over the coming months leading to more job losses, according to a new survey.
The latest Ernst and Young/Construction Products Association Activity Barometer found that 60,000 jobs have been lost in the industry with a further 9,000 in the last three months.
The survey once again 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 a score of 80 less than two years ago.
Noble Francis, economics director for the Construction Products Association, said; “Once again, heavy side 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. Light side manufacturers are enduring sales falls, albeit it from a higher base, but they too are now predicting a very gloomy few months.”
Dominic McAra, a director in Ernst & Young’s construction products team, said: “The last quarter has been particularly tough for construction products companies.
“It will be companies with strong cash reserves that will find 2009 least painful and it is no surprise that a number of the larger companies have had, or are contemplating, rights issues.
“The next six to nine months is likely to see companies aiming to maximise liquidity and ensure that they keep within banking covenants. This will almost certainly result in restructuring. For companies of all sizes, keeping control of debtor and inventory levels is going to be a significant challenge.
“Whether the downturn ultimately provides opportunities for the stronger companies to re-commence consolidation will depend on the speed at which confidence returns.”