Anyone with a passing or professional interest in the brick industry might have found themselves slightly confused by recent news from two rival brick manufacturers. Last week, multinational producer Wienerberger announced that it was ramping up UK production by 200 million bricks this year by re-opening two mothballed factories – enough extra capacity, it said, to build 25,000 much-needed homes.
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But, also according to Wienerberger, there were 215,000 housing starts in 2007 versus UK brick production of 2.3 billion, versus 165,000 predicted starts in 2014 and 1.8 billion bricks likely to be produced. In other words, plenty of bricks to go round.
So how can two companies present such a different view? CM asked Noble Francis, economics director at the Construction Products Association, to give us an overview of the situation.
He put the situation in context: housing starts in Q1 were 31% higher than a year earlier and brick production in April was 39% higher than a year earlier. Again, it seems the market has responded appropriately, upping supply to meet demand.
According to Wienerberger there are plenty of bricks to go round
Another factor that suggests there isn’t a crisis – although one that might not please BIS and Whitehall, or indeed sustainability consultants – is that import of bricks in Q1 2014 was 63% higher than a year earlier. “A rise in imports short-term is natural when a market is rising quickly from historic lows,” said Francis.
He added that the pinch-points that could jeopardise future housing delivery are more likely to occur on the labour/skills side than on the supply of bricks and materials. “Labour is less flexible and you cannot just import (easily) to deal with a rapid recovery. In our Construction Trade Survey in Q1, 61% of contractors reported difficulty in obtaining bricklayers,” he said.
Francis firmly believes that there isn’t a shortage, but he offers this explanation of why a perception of crisis has taken hold. “Pre-recession, house builders were used to planning weeks in advance for materials and there was little issue. After the recession hit, house builders got used to ordering materials days in advance. The rise in demand in the housing market and consequent rise in house building means that materials prices have risen (but are nowhere near pre-recession peak levels) and house builders have to plan in advance once again. Is that a shortage? No, that is the natural consequence of a rise in demand after five subdued years.”
And he also believes that different business practices among large house-builders and SME developers could partly account for the different perspectives offered by Michelmersh and Wienerberger. “Some house builders have long-term contracts with brick manufacturers, so they won’t be experiencing any problems. But SMEs might be in a different position – if prices are going up and they don’t have the same supply they’re used to, they might claim there’s a problem, when there isn’t.”
