Predictions for the Construction Industry in 2023
And Nick's reflections on a difficult 2022
nick baker - owner & managing director
As 2022 comes to a close, Nick Baker, Owner and Managing Director of Wainwright Direct, shares his thoughts on the previous year in the construction industry, and what’s in store for 2023.
2022 has been a difficult year for the construction industry as a whole. A shortfall in materials, labour shortages and the effects of a post-COVID world have all had an impact on the industry in different ways.
Looking ahead to 2023, the general outlook is pretty bleak. But whilst it will be tough, I’m much more positive about the year ahead.
2022: A Year to Forget…
Although the UK saw an end to COVID restrictions in 2022, the economic impacts of the pandemic have been felt heavily in the construction industry.
This year, supply chains and pricing have been all over the place. Materials have been coming in and out of stock all year making it difficult for people to know when they can complete their projects. Towards the end of the year we have also seen special offers coming and going towards the end of the year, making prices unpredictable.
It is fair to say that there has been a fair bit of profiteering in the last year by some suppliers, and we have done our best to negate this by making use of our extensive network.
As the industry prepares for the Christmas shutdown, we are seeing a price stabilisation and even seeing some prices begin to come back down.
Because the market is constantly changing, suppliers have bought a lot of stock which they then need to pay rent on to store. To make things worse, due to the market’s unpredictability, this timber was probably bought as the market was declining, so they paid over the market rate, so are looking to move their stock quickly. For example some timber has seen a 8-10% drop in price, purely because they need to get it out of storage. We have also seen a similar situation with insulation boards.
But this has added competitiveness to the market towards the end of the year, with lots of suppliers competing with each other on price. We have actually seen many suppliers chasing up their quotes, something which we have not seen before. This just reflects the state of the industry at the moment.
“2022 has seen sales suffer across the industry. We ourselves have felt the effects of the turbulent year, sometimes taking sideways or backwards steps away from our targets, but I am predicting a much better 2023.”
Why Have We Seen So Many Issues This Year?
As imports are such a crucial part of the UK supply chain, factors such as Brexit and high fuel prices, caused by the invasion of Ukraine, have had a knock on effect on customers.
In fear of supply issues, suppliers have bought their materials in bulk and at any price to reduce shortages. All this stock needs to be stored somewhere leading to higher pricing for customers.
People naturally want to buy at the most competitive rates, because of the issues the country and world has faced, the prices continue to increase. People waited too long to buy their materials, because they believed the price would come back down. Unfortunately both buyers and suppliers lost out.
However, in 2023, I am expecting this to stabilise. I believe the effect of Brexit has thankfully not been as big as everyone has expected. Initially the difficulties bringing containers to the UK produced much higher costs, however this has since stabilised at a much lower price. As for fuel prices, they are slowly coming back down, which should further reduce transportation costs. I believe in the first one to two quarters of next year, everything should be realigned making the market much less volatile.
A Positive Outlook For The Year Ahead
In 2023, I am hoping that it is much more positive. Many are predicting another difficult year, but I believe it will not be too dissimilar to the recessions of the past. In the early 90s, we found the fight for business tough, but that is the nature of the construction industry. We may be entering a recession, but it’s a challenge everyone is facing and one we cannot control. A positive outlook is needed, and one that is reflected in our 2023 predictions.
I am anticipating that the market is going to settle down quite quickly. Initially we will see some price fluctuations as suppliers aim to clear their stored stock from the previous year, but by the end of Q1 this should pass.
All the chaos of price increases from one week to another in 2022 is going to disappear and luckily we’re not going to see that type of thing again. This is of course if there are no external factors to contend with. As we saw last year with the invasion of Ukraine, this had a massive effect on our industry. But if the sector can avoid being affected from the outside, we should see stability.
Labour shortages have affected the whole industry in 2022. With cash flow down, we have seen funding pulled, having a knock on effect on those on the ground. I am hoping that this will be a short sharp shock. A reason to be positive is that we should see an increase in housebuilding, as projects have been pushed back through the winter, which is a positive for the industry going into 2023. There’s always going to be construction, meaning workers will always be needed.
In Q2, I think that we’re going to see a lot more financial stability in general, not just in the construction industry. This may take time to stabilise, but we should see decent growth in the rest of the year.
New Year, New Products & Processes
A new year will bring fresh challenges. The amount of products that are available to builders on a commercial and residential basis is always changing and keeping up with it can be quite a challenge, but our team has an eye for anticipating what’s around the corner.
Even with our best predictions, as history suggests, priorities may change. Those purchasing insulation now prioritise fire safety, following on from the Grenfell Tower Disaster in 2017. These buying habits changed almost overnight, which meant we needed to adapt quickly.
“Our team will be keeping a sharp eye on the market in 2023 for new products and their prices to get the best deals for our customers.”
Our Desire to Grow
Following a difficult year, we are expecting a big 2023. To combat demand, and to help us grow, we will be expanding our team. Due to some big layoffs across the industry, the talent pool is out there and this is going to allow us to bolster our team with the right level of experience and know-how to serve our growing customer base.
In terms of new products, we are always actively researching and evaluating them to ensure we bring the right quality to our customers. Our extensive network of suppliers allows us to diversify our offerings to customers. Our team is always happy to advise customers on which materials will be best for their project, whether that is commercial or residential.
To help facilitate our planned growth we are looking at diversifying our offerings, so that’s something to look out for in 2023.
The Bottom Line
I am feeling quite optimistic for next year and I’m looking forward to the challenge it brings. However, Q1 and Q2 are going to be quite crucial to set the stage for the rest of the year. Depending on how the industry reacts post-Christmas, we could see a quick return to “normality.’’ We will have to wait and see, but I am feeling quite positive for 2023.
Make sure your project hits the ground running in the new year! With 2023 just around the corner, we are taking pre-orders for January now. If you would like to benefit from some of the most competitive prices and lead times in the industry, get in touch with us here:
OUR NEWS Preparation for supply issues & price changes Preparation For Supply and Price Changes James baker – Senior Sales Executive The …
OUR NEWS Equipment Your Construction Site Needs This Winter 9 Tools and materials that you need to have this winter James baker …
OUR NEWS And Nick’s reflections on a difficult 2022 nick baker – owner & managing director As 2022 comes to a close, …