The lead times for this quarter show that the sky hasn't fallen in yet for manufacturers, but suspended ceilings have been a bit shaky, as Gardiner & Theobald finds. For starters, Mace tracks the lead times for 38 works packages
Only three packages show increased lead times this quarter and the chart shows downward movement in six sectors. These changes are not large shifts but the number of reduced periods is clearly disproportionate. Usually the split is more equal.

Of those questioned, 17% expect lead times to drop in the next six months and 76% expect them to be static. Significantly, only 7% expect lead times to increase. This is surprising, as 23% of firms noted that they were busier with enquiries than in the past six months. Half said interest levels were unchanged. However, reports in the press of serious slowdowns do not seem to be biting the supply chain at the moment. It may be that a serious downward trend in lead times will happen in 2002.

Generally the piling (same) market is unchanged. Good stocks of precast piles are available that will allow delivery in fewer than four weeks. Driven pile specifications may need more time. All companies questioned expected lead times to drop.

Steel frames (down) dropped slightly (nine weeks, from 10) as enquiries fell. Despite a fall in the period required for drawings, design engineers are in short supply.

Bespoke panellised cladding (down) lead times fell (41 weeks, down one) as enquiries dropped slightly. Capacity is available in factories and all items apart from high performance glass are available. It has been noted by some companies that it takes up to 16 weeks to procure coated glass.

The curtain walling (down) sector saw reduced lead times of 22 weeks (down two). There is less uncertainty about the new Building Regulations (14 September, page 75) and companies are taking a pragmatic, rather than reactionary, view.

Atrium roofs (same) maintained a lead time of 32 weeks. Companies are selectively tendering to prevent excessive workloads.

An increase of one week to 20 overall in the metal window (up) sector was caused by a number of £1m contracts and enquiries that were received. Companies report that these orders may result in another increase in lead times in the next quarter.

Demountable partitioning (down) companies noted a slowdown in enquiries for new projects and consequently lead times fell to nine weeks (a drop of one). This was anticipated in the last article.

At the moment, firms feel that only one week is adequate to complete standard production details. Bespoke design solutions are often now developed in tandem with the design consultants during the period usually allotted for review of shop drawings.

Since the reduction in lead times for the raised flooring (same) industry last time, no further changes have been noted.

Suspended ceilings (down) lead times drop to 16 weeks, a fall of one week, as the effect of reduced manufacturing periods is felt. Enquiries are generally quieter than six months ago.

Escalator (up) lead times returned to 20 weeks (up one) after a dip last time as clients plan work for 2002.

After rising last time, electrical works (down) have fallen back to a 20 weeks lead in. Both design and procurement periods fell. Procurement tends to fluctuate a lot, with two to six weeks a typical range depending on the exact details of the order.

Furniture manufacturing (up) periods increased by one week. Lead times in this sector are expected to remain around nine or 10 weeks for the coming six months.

Spotlight on suspended ceilings

Lead times
Indicative lead times for suspended ceilings reduced this month to 16 weeks, the first change since the second quarter of last year and the first reduction since the third quarter of 1999. Robert Barker of SAS ceilings advises: "There has been a reduction in lead times through improved efficiencies, allowing reduced manufacturing periods and enabling suppliers to offer a better service."

Reductions in workload have contributed to this reduction and the predicted slowdown in construction activity is likely to result in lead times reducing still further over the next 12-18 months, and perhaps stabilising in 2003.

However, ceilings vary enormously in complexity of design and the periods quoted may be considered as a guide for bespoke installations. Lead times for standard-component ceilings can often be as short as four weeks from order to delivery.

Enquiry levels
One UK-based specialist gloomily asserts: "Our enquiry levels are now as low as they were in the early 1990s, and have been poor for the last few months." He then adds, more brightly: "But activity is still brisk in the marketplace, with a lot of projects coming up next year."

Other contractors claim that they have not detected a slowdown in activity. This is particularly the case for those operating in London and the south-east of England, especially along the M3 and M4 corridors and around the M25.

Brian Barrett of Barrett Suspended Ceilings says: "Although there was a slowdown in enquiries earlier in the year, in the past four weeks there has been a marked increase in the levels of enquiries we have received. Not only has the number picked up but they are also of a more substantial nature."

A few of the larger suspended ceiling contractors share the view that the economy was already slowing before the events of 11 September. In fact, some already had evidence of international customers cancelling projects despite being committed to build. There is still a high level of optimism, though, with a number of the ceiling contractors we spoke to suggesting they felt confident that the situation would turn next year, resulting in a marked recovery through the latter stages of 2002 and into 2003.

The overriding view of suspended ceiling contractors seems to be that, although enquiry levels at present remain close to normal, there is anticipation of a marked slowdown in the market. How long it will be before the ceiling market is affected remains to be seen – ceilings installations are at the tail end of the construction process.

Michael Wilson, managing director of Star Ceilings, acknowledges that there may well be a downturn in the market, with increased competition and associated reductions in tender prices, but he remains bullish: "Building is not for the short term – it is a long-term investment. With interest rates so low, and contractors eager for work to maintain turnover – surely there is not a better time to invest in building."

Orders and workload
No suspended ceilings subcontractor has acknowledged full order books, but many report orders totalling as much as 50% of capacity workload stretching over the next 18 months. Andrew Dean, sales manager of ceilings specialist Hatmet, advises: "There are certainly those within the sector that are talking of a slowdown, and two to three months ago we would have agreed, but of late we have been successful and now have a healthy order book." However, some ceiling contractors are receiving calls on a daily basis from labour-only subcontractors searching for work, a sure indication of a slowdown in workload.

Chilled ceilings, first developed in Scandinavia over 30 years ago and now prevalent across mainland Europe, are currently enjoying strong growth. They were slow to take off in the UK market, possibly due to the initial high price of installation, but falling capital costs together with whole-life savings has led to considerable growth in the past two years. Whereas five years ago the cost of a chilled ceiling installation was about £130/m2, this has now, in many cases, reduced to as little as £90/m2.

Significant savings in running costs are brought about by greater energy efficiency than traditional cooling systems and very low maintenance requirements; these ceilings also offer considerable reductions in ceiling void requirements – often as little as 200 mm – making them ideally suited to refurbishment projects where existing storey height may preclude a traditional system. Even for new build, the reduction in storey height when using chilled ceilings can offer savings on construction costs and increase floor area within height restraints.

Chilled ceilings now make up between 10 and 15% of metal ceiling installations.

Figures courtesy of A Report on the UK Suspended Ceiling and Partitioning Market 2001, published by AMA research.

Tender prices
As enquiries and workload fall, the rate of increase in tender prices is expected to ease over the forthcoming year. Some of the contributors to the Gardiner & Theobald Tender Price Survey declared that their prices have fallen between 2% and 5% in the past 12 months. Although some anticipate further reductions, most foresee a steady period over the next few months before tender price rises return to the levels experienced earlier this year. Some contractors are plainly reducing their tendered margin. One suspended ceiling contractor advises: "We always tender as keenly as possible, but lately we have been surprised on a couple of recent tenders when our tender price was more that 25% above the lowest." But on the whole it seems that contractors do not yet see the need to chase turnover.

Within the suspended ceiling sector, materials prices have remained static for many years, and reports suggest that there are no current plans by manufacturers to increase prices. A buoyant market over the past three years has meant tender price increases of about 8%. This buoyancy has also led to increases in the cost of labour, but with demand falling labour costs are now levelling out.

Overall, apart from some local hot spots, tender prices for suspended ceiling work are forecast to remain almost unchanged through 2002, with a modest 2.5% increase anticipated in 2003. However, recent events will have an unprecedented effect on the general global economy and the construction market. It remains to be seen if the current wobbles turn out to be a temporary setback or the precursor of a more serious downturn.

How they stand

Going up:
Metal windows
Furniture manufacturing

Staying level:
Raised flooring
Atrium roofs

Going down:
Curtain walling
Bespoke panellised cladding
Steel frames
Electrical works
Demountable partitioning
Suspended ceilings