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Building on sound footings

17 Apr 15 Brick manufacturers are investing heavily to meet growing demand. And what they most need now is stability in the housebuilding market, says Michael Ankers

The number of housing starts in Great Britain has risen by over 36% in the past two years. That’s good news for the industry and an encouraging start to addressing the chronic shortage of housing. But a sudden increase in activity puts strain on the supply chain and it is no secret that materials suppliers have struggled to keep pace with demand. Brick, with its close association with housing, has been a particular focus of attention.

As the rate of housebuilding started to accelerate in 2013 some housebuilders, anticipating a potential shortage of supply, built up stocks well in advance of needing the products on site, further exacerbating the supply problem.

In response, the industry has had to increase its output significantly. In 2014 the number of bricks manufactured in the UK increased by 20%, with a further increase of 10% expected in 2015. Five previously mothballed plants have been reopened in the past few months; a sixth plant – Wienerberger’s Ewhurst factory in Surrey – re-started production this month while a seventh factory is soon to introduce a new production line to increase capacity. Other companies have made investments to increase capacity through the upgrading of existing operations and there has been a significant increase in brick imports, particularly from Belgium and Holland where demand is currently not as strong as in the UK. But the increase in supply has taken time to filter through to the market, with some sectors feeling the pinch more acutely than others. Monitoring by the Brick Development Association (BDA) suggests that smaller merchants and regional housebuilders (particularly those without established relationships with manufacturers and without having the same capacity to build stocks) have been particularly affected. Businesses working on smaller projects tend to have shorter leadtimes and are therefore particularly affected by blips in supply.

Brick manufacturers also face the challenge of supplying such a wide range of products. The UK brick industry makes over 1,200 individual types of brick. A brick factory may be manufacturing many different products and production constraints can make it difficult to interrupt the process in response to one small order. This inevitably means that shortages can be acute for an individual brick.

To address this particular problem the BDA, together with other interested parties, has written to every planning authority in the country, urging them to show flexibility in the type of brick that can be used on particular developments when exact matches are not available. Since the priority must be to support the supply of new housing, this approach seems a pragmatic way of addressing an additional cause of delay.

We should expect to see continued growth in the housebuilding sector for the foreseeable future. All the major political parties seem to have recognised the problem of a housing shortage and the ambition remains to build more than 200,000 houses per year – an increase of over 25% in the number of housing starts in 2014.

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The brick industry is keen to respond positively to this challenge but, in common with many other manufacturers, it needs to be confident that there is a real and longterm commitment to this level of increase. The speed and severity of the downturn in 2008 resulted in manufacturers having to close 30 plants, many of which have been lost forever.

A new brick manufacturing plant will take up to five years to complete and require an investment in the region of £50m. This will only be an attractive investment proposition if the market can be rid of the extreme volatility seen over recent years. The need for some stability in this important sector is not just felt by manufacturers, of course. We are also seeing the impact of the loss of thousands of skilled workers who left the industry in recent years and will take time to replace.

So long as brick remains the favoured choice for housebuilders and home-buyers, there will always be a need to invest in brick production. All that the UK brick industry needs to deliver the volume, variety and quality of products that its customers want is a stable, well-regulated housing market.

• Michael Ankers is chairman of the Brick Development Association

This article first appeared in the April 2015 issue of The Construction Index magazine. To read the full magazine online, click here.

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