The UK economy is bumping along, we have read about construction material costs rising across the board, tightening labour availability, and the latest Construction PMI shows subdued growth conditions.
So, what does 2018 and beyond hold for the structural steelwork sector?
Given these general conditions, the outlook is solid – as is the sector itself. In 2017 structural steelwork consumption in the sector was 894,000 tonnes. We did see an easing in consumption last year, but 2018, 2019 and 2020 are forecast for an increase of 1.4%, 2.5% and 2.2% respectively giving total structural steelwork consumption of 950,000 tonnes by 2020.
The largest sector for structural steelwork is industrial buildings, accounting for around 47% of structural steelwork consumption in the UK in 2017. This includes warehouses, factories, portal framed superstores, infrastructure buildings such as airports and stations, and cold stores. This sector saw massive growth in structural steelwork consumption between 2012 and 2016 – 30% by volume. In 2017 structural steelwork consumption in industrial buildings fell by just under 3% as the building boom is massive distribution centres eased, but demand is set to pick up again in 2018 and beyond, leading to further rises in structural steelwork consumption (+1.4%), 2019 (+0.2%) and 2020 (+0.9%).
Things will remain a bit softer in the offices sector, one renowned for economic cycles, especially in the London market. In terms of structural steelwork consumption, this sector accounted for a 13% share in 2017. Our analysis shows that there will be falls in the construction of office buildings in London in 2018 and 2019, only partially offset by solid growth in the construction of offices in regional cities. This will result in a reduction in structural steelwork consumption for the sector. However, a pickup is due in 2020.
HS2 will have a positive effect on structural steelwork consumption in both bridges and other rail structures from 2019 onwards, with 50% growth in consumption in the sector expected between 2017 and 2020.
I’m often asked about the capacity of the sector to manage increases in demand for structural steelwork; this becomes pertinent as we move back towards the 1 million tonnes mark of structural steelwork consumption. A recent study of the UK’s structural steelwork capacity showed that there was ample latent capacity in the sector to meet increased demand. As our member companies look forward many are investing in new automated machinery and equipment, as well as other technology to boost productivity.