Construction Investment Running at Record High Levels

Investment in the construction industry is running at a higher rate now than at anytime since 2000, according to a latest survey by the Construction Products Association.Responding to increasing concerns about product shortages, the survey, contrary to this view, has demonstrated the industry’s confidence in meeting demand for construction products, backed by a 10% increase in new capacity since 2005 with a further 9% rise planned for the next two years.

Commenting on the survey, Allan Wilen, economics director for the association said: “Although there is a number of major construction projects planned over the coming years, including the 2012 Olympics, the industry does not expect problems supplying UK demand for construction products.

“However, what we are concerned with is the longer-term capacity constraints due to inadequate road and rail infrastructure, especially when investment in the road system is at its lowest for a quarter of a century.

“The forthcoming Comprehensive Spending Review this autumn provides an opportunity for the government to reverse this lamentable position. Despite a number of recent policy announcements this summer, it is vital that the CSR sets out a clear programme of investment to enhance the countries transport infrastructure. The construction products industry is investing and planning for the future, but we need the government to play its part; let’s hope its spending plans will match our commitment and confidence in the future of the UK economy.”

Other conclusions from the survey include:

·Firms in the construction products industry are working at a higher level of capacity than for a number of years, but two-thirds of companies are still working below their optimum levels.

·Although there have been some instances earlier this year where a few companies in specific sectors had had difficulties supplying the UK demand for their products. These were as a result of short-term constraints, not long-term structural deficiencies in the industry.

·Companies have dealt with short-term constraints mainly by increasing efficiency and enhancing output from existing plants. In some sectors increasing imports had also been possible.