Mortar, mortar everywhere02/11/2011 10:47:33
I was talking to a chap who sells cement the other day, as you do. And what he said worried me.
It's always struck me that cement sales (along with brick and block sales) are a pretty good indicator of how healthy or otherwise this market is.
Fairly indisputable fact number 1: You need cement to build stuff. Fairly indisputable fact number 2: If you aren't selling any cement then it's because no-one is building anything. Fairly indisputable fact number 3: If no one is building anything then we are in trouble.
Anyway, this guy I was talking to sells cement to a wide variety of customers, some of it in great big bulk containers, some of it in smaller lorry loads of packed cement. He said that his sales of bulk cement were holding up OK but that sales of packed cement were struggling.
Worrying that, because paced products invariable go to the RMI market, via the builders merchant.
Worrying that, because all through the financial mess of the last few years, it's been the RMI market via the builders merchant which has been holding its own more or less.
Worrying that, because the bulk cement sales will go to larger infrastructure and public sector projects, of the kind that the public spending cuts are designed to halt.
Turns out I'm not the only one who has made the link between the grey stuff and economics. The BBC sent the rather splendid Stephanie Flanders (I'm a big fan) to Hanson Cement's part mothballed Ketton factory in Lincolnshire for a report on News at Ten last night, interviewing both MD Jon Morrish and a factory worker who's worried about the future.
Morrish told Flanders that, currently, the mothballed kiln is serviced regularly, just in case it needs to be brought back to life quickly. However, the suggestion is that, unless things improve out there, they might stop bothering.
As usual, there are differing opinions about just how far in the mire we are. The growth reports from the ONS showing GDP of 0.5%, held back by 'dire' manufacturing results, caused George Buckley, a Deutsche Bank UK economist to say that it is "worse than the position we were in at the same stage of recovery following the Great Depression". Ouch.
According to today's Telegraph the recovery is now technically the slowest in at least 100 years and the economy is currently no bigger than it was in December 2006.
On the other hand, the Markit/CIPS UK Construction PMI - is showing growth picking up to five-month high in October, despite an evident weakness in housing. Apparently, it was the commercial-based construction output that was the principal driver of overall growth. In contrast, the report says, civil engineering activity was broadly stagnant, while the housing sector continued to suffer.
So maybe my pal was right and bulk cement sales are holding up and maybe they will continue to do so. But the Markit/CIPS data doesn't seem to tally with the CPA forecasts, nor the anecdotal evidence from the people at the sharp end.
Having said that, I've just seen a builders merchant delivery lorry drive past the office window looking pretty full, so maybe thoughts of doom and gloom are a bit premature. Fingers crossed.
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