Joinery sales have risen for the tenth successive quarter but increasing labour and material costs are taking their toll, according to the latest Joinery State of Trade Survey released by the British Woodworking Federation (BWF).
The survey conducted among BWF members revealed healthy sales performances in the third quarter of the year, despite Brexit concerns. Manufacturers were also confident that sales would improve in the next quarter, with a balance of 50% predicting an increase for Q4 2016 and a balance of 45% predicting an increase over the next year.
While 59% of respondents said they had order books of future work between one and three months, 28% of companies reported an order book extending beyond three months, a slight decrease (3%) on the previous survey.
More than half of joinery businesses had increased their investment in product improvement, and 41% reported increasing their labour force in the last year, with 36% anticipating creating more new jobs next year. However, more than two thirds had encountered higher labour costs so far, and 86% expected increases in the coming year.
Wage and salary increases were pushing up costs for 86% of respondents, and a staggering 91% said that raw material costs were now an inflationary factor for unit costs, compared to 59% who noted this in the previous quarter. Additional impacts were now being felt from increasing energy costs and unfavourable exchange rates.
Matt Mahony, BWF policy and communications executive, said: “The survey results are similar to those of the previous quarter in the sense that sales performances for BWF members remain strong. This is obviously encouraging but the joinery industry is still relatively cautious about the long term outlook, especially in terms of profitability.
“Anecdotal evidence suggests that our members are working harder and more efficiently than ever, but supply chain finance issues, rising costs of raw materials and salary increases threaten to impact on businesses and potential investment opportunities in 2017.”
Through its leadership role within the Confederation of Timber Industries (CTI), the BWF is calling on the government to “steady the ship” through its forthcoming Industrial Strategy and Housing White Paper.
Iain McIlwee, BWF chief executive, echoed the CTI’s views that the announcements in the Chancellor’s Autumn Statement setting housing and infrastructure at the heart of economic policy were good news and would have a positive effect on the timber sector.
He added: “Through some well-timed policy papers, the government has an opportunity to steady the ship in early 2017. And it is stability that our members need right now, encouraging the potential of the joinery manufacturing and woodworking industry which is well placed for further growth and profitability.
“In particular, it is critical that the forthcoming Industrial Strategy helps set a vision that includes the wider manufacturing sector. Too often talk of manufacturing focuses on automotive and aerospace, with vital sectors such as construction products, twice the size of automotive in the UK, slipping below the radar. We have fed views into the recent Industrial Strategy consultation and hope this vital work will be fast-tracked and gain full and focused cross-departmental support within government.
“With current policies also focused heavily on home ownership over housing supply, the government should also continue to use anything in its toolkit – increasing direct investment if necessary – to end the housing supply crisis, and to drive this policy through all parts of central and local government.”
BWF members are able to view the full State of Trade survey results at: http://bwf.org.uk/publications/market-research
To read the BWF’s letter to the Chancellor, go to:
http://www.bwf.org.uk/assets/autumn-statement-2016-british-woodworking-federation-letter-to-the-chancellor.pdf
