Rail strikes threaten construction deliveries

Empty tracks

Last week railway workers voted overwhelmingly in favour of strike action. 71% of those balloted took part in the vote with 89% voting in favour of strike action and 11% voting against. The RMT union said it was the biggest endorsement for industrial action by railway workers since privatisation.

Although peace talks continue, the RMT national executive meets on Tuesday 7th June to set dates for phases of industrial action.

The building materials sector wants the government to “prioritise” transport of construction materials should the strikes go ahead. (…Of course it does. Ed)

John Newcomb and Peter Caplehorn, chief executives of the Builders Merchants Federation and the Construction Products Association, co-chair the CLC product availability working group and have been issuing regular bulletins on shortages of building products and materials. Their latest statement is dated 31st May 2022 and reproduced in full below.

“Price inflation and a diminishing labour supply are now of greater concern than product availability in most construction sectors.

“In terms of availability, little has changed since our last report, with a good supply of most products and materials. Ongoing challenges continue to affect bricks, aircrete blocks, roof tiles, chipboard flooring, gas boilers and other products requiring semi-conductors within sub-components, all of which will be subject to longer lead times throughout the year.

“The market is becoming more adept at managing supply of these critical products, and the long-term nature of some of the underlying issues. Although there are reports of delays in supply of boilers leading to extended completion times in new housing, new semi-conductor capacity is coming on stream in late 2023/2024, and expansion in existing capacity will feed into the market over the same timescale.

“Demand remains strong in all areas, and this is set to continue into the autumn, although some product forecasts now anticipate a slight slowdown in housing starts towards the end of the year, stemming from rising prices and concerns about affordability. Home improvement work will depend on levels of consumer confidence as costs of living rise.

“Members of the group raised concerns regarding the threatened rail strike. This will affect aggregate and concrete deliveries to major infrastructure products, highlighting the need for government to prioritise transport of construction materials should the strike go ahead.

“There is, however, some good news from parts of China. With Shanghai gradually removing covid restrictions, production should normalise in that major industrial region by mid-June. Shipping analysts warn, however, that this may exacerbate the current bottlenecks in deliveries to the west.

“Across the board, managing price volatility and labour are now the biggest issues.

“Although labour shortages are affecting manufacturers, the greatest concern is expressed by housebuilders and SME builders, as it takes at least three years to train a skilled tradesperson.

“The cost of energy and fuel are major drivers for price volatility. Initial results of the group’s horizon scanning exercise suggest energy hedges are short term and very significant increases are expected to come through quite quickly. This will particularly affect energy-intensive products including steel, glass, plasterboard, cement, ceramics and porcelain.

“Although steel prices have come down slightly, since initial disruption following the outbreak of war in Ukraine, energy prices remain a major issue and price volatility will continue. Market prices will also be affected by the Indian Government’s unexpected increase to export duties on iron ore and steel, effective from 22 May.

“The CLC group will continue to actively engage with energy intensive manufacturers over the coming months, and closely monitor market conditions and the impact of any further price increases and volatility.”

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