New CPA president takes on energy price crisis

John Colley, an executive managing director at materials company Saint Gobain, takes over as president of the Construction Products Association at its annual general meeting next Tuesday.

Colley takes on the role from Roy Harrison at an important time in the CPA's life. It has been seven years in existence and in that time chief executive Michael Ankers has turned it into an efficient and authoritative machine that represents an estimated 80% by value of the UK's construction product manufacturers and suppliers and has the ear of the government.

The CPA's annual report, Achievable Targets, is the only publication that tracks in detail the government's performance in delivering promises on housing, school buildings, health facilities, roads, railways and water.

Its authority is acknowledged by the government itself. Three weeks ago Baroness Andrews, parliamentary secretary at the ODPM, had lunch with the CPA and some of its members in a Westminster hotel and one of Colley's first responsibilities will be to host a lunch in May, alongside Ankers, with energy minister Malcolm Wicks.

When he meets Wicks in May, Colley will have a lot to talk about. As he takes the CPA's agenda forward he says the focus will be on sustainability, maintaining and improving the built environment in the UK, regulations, and energy prices. It's no secret that energy price hikes are hitting the industry, but Colley and the CPA are concerned that the government does not fully appreciate the serious impact the trend is having and will continue to have.

"Building materials companies are big energy users," says Colley, fresh from his lunch with Baroness Andrews. "The government hasn't seen much of the inflation impact of oil prices, which is being absorbed by the manufacturers."

Some CPA members are reporting energy price hikes of up to 300% over the past three years, and UK companies are paying an average of 40% more than rivals in the rest of Europe.

According to Colley, prices in 2006 have doubled since last year - and 2005 prices were already three times more than the year before that.

As a result, one of Saint Gobain's suppliers is shutting three plants in the UK. "It [energy price inflation] means our businesses just can't compete," says Colley.

John Colley

The inflation impact of oil prices is being absorbed by the manufacturers

The CPA has already highlighted its concerns in a letter to the chancellor, Gordon Brown, but Colley says he is "not terribly optimistic" about prospects for change. They will at least have the opportunity to argue their case in front of Wicks, who will be keenly aware that because North Sea reserves are dwindling there will no longer be a domestic control on gas.

Overall, though, Colley is reasonably optimistic about prospects for the construction industry, with particular opportunities in the health and education sectors. He identifies the housing repair, maintenance and improvement sector as the weaker end of the market at the moment, alongside transport infrastructure.

Colley embarks on his role as president straight off the back of a turbulent time at his own company, BPB. The company was eventually taken over by French materials giant Saint Gobain for £4.5bn in December after it had earlier rejected a lower offer.

In one decisive move, BPB's "new lords and masters" came in, delisted BPB and closed its headquarters. "They've made a lot of savings pretty quickly," says Colley.

Colley, however, has done well out of the takeover. He has retained his position of managing director of the gypsum division for Saint Gobain in northern Europe, and his remit has been broadened to include insulation.

Colley says that despite the two companies being "culturally very different", the takeover was "quite a stimulating experience". Unsurprisingly perhaps, Colley describes his new bosses as being "strategically very astute". After all, the BPB acquisition has propelled Saint Gobain from a company with no presence in the plasterboard market to its biggest player.

He is a lot more relaxed than when Building first met him in November last year in the midst of the takeover battle. Having had plenty of time to become accustomed to the prospect of his imminent presidency at the CPA, he clearly relishes the chance for change.