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12 February 2010

MPA Calls for Government Investment as Industry Sales Volumes Plummet

The dramatic reduction in aggregates and cement industry sales in 2008 and 2009 provides further evidence of the scale of the construction recession and highlights the need for Government to preserve investment as a driver of economic recovery.

Crushed rock and sand and gravel aggregates sales volumes declined by 25% and 23% respectively in 2009, cement fell by 25%, ready-mixed concrete by 30% and asphalt by 18%.  Although the sales volume decline moderated towards the end of 2009, this reflected a comparison with declining markets in 2008, and actual volumes remained extremely low throughout the year.  The cumulative effect of 2008 and 2009 is even more marked, with aggregates and cement sales falling by 35% over the two years, ready mixed concrete by 40% and asphalt by 20%.

The unprecedented reduction in sales is a consequence of the severe contraction in construction activity through 2008 and 2009, and it has occurred despite some government construction spending being brought forward following the 2008 Pre Budget Report.  Although the economic recession may have technically ended in the final quarter of 2009, the outlook for construction remains negative, with orders for new construction down 14% in the first eleven months of 2009. ConstructionSkills estimates 375,000 construction jobs have been lost in 2008 and 2009, a figure which will continue to worsen this year.

Commenting on the implications of these data, Simon van der Byl, Executive Director of the MPA, warned:

 “The danger for the economy is that current Government plans to focus public spending cuts on investment will stifle the chances of any recovery in construction activity. This in turn would limit the potential for economic recovery and badly hit much needed investment in areas such as housing, transport, health and education. For example, in recent weeks we have all seen how the cold weather has exposed the already poor condition of much of the road network and highlighted the need for sustained investment in this area.

Construction activity is one of the most effective means of stimulating economic growth and employment, but the evidence from our sector and elsewhere is that industry workload is still declining. We all recognise the scale of the public sector deficit but sustaining public investment in construction as much as possible over the next five years is absolutely critical to economic recovery and the quality of public services.”

To view the trends graphs, click here.

ENDS

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