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[February 2009]
Research Report on UK Bricks & Blocks Market 2008-2012
In the new AMA Research study for the industry, it is reported that the overall bricks and blocks market in the UK was worth over £1.25 billion in 2007, but rapidly deteriorating market conditions resulted in a substantial decline in 2008.
Demand for bricks and blocks is largely reliant on underlying strength in the construction sector. Construction output rose by 7.4% in 2007 but slowed down significantly in 2008 as the impact of the ‘credit crunch’ reached local markets. The housebuilding sector has been particularly hard-hit, with leading housebuilders reducing output by over 30% in some cases.
Demand for bricks has been in gradual underlying decline since the end of the post-war construction boom, in spite of periodic spurts of growth triggered by temporary increases in construction activity. In addition, the general switch to steel and timber frame (now accounting for around 20% of all new housebuild), coupled with the switch to apartment building over the last five years, has also undermined demand for bricks and blocks in the new build sector.
By value, the total brick market reached an estimated £491m in 2007, down from a 10-year high of £543m in 2004. Given the recent steep decline in construction activity it is anticipated that market values will fall by around 20% in 2008 to around £406m. In 2008, brick producers – in particular the larger companies with multiple production facilities – have had to cut capacity, reduce staffing levels and close depots to adjust to the new market conditions. Industry sources indicate that brick production is set to decline from 2.7 billion units in 2007 to around 1.8 billion in 2008, the lowest level in over 60 years.
Demand for pre-cast concrete blocks – dense, lightweight, aerated and ‘special’ blocks (architectural dressings) – architectural masonry and cast stone blocks has been relatively buoyant since 2000. In value terms, the market was worth over £700m msp in 2007 but given current market conditions it is expected that this will decline by around 13% in 2008.
Natural stone – ashlar and dimensional, or building stone – is used internally and externally on new buildings as well as for RMI work on historic/Listed buildings. The latter usually require specific types of stone, from original or at least compatible sources, typically supplied by local or other specialist quarries. By value, sales reached an estimated £111m in 2007, but is estimated to have declined by around 12% in 2008.
It is expected that the current rate of decline in the UK construction sector will deteriorate further in 2009 as orders for new work placed in the second half of 2008 have decreased substantially – not only for housing but also across some commercial and public non-housing sectors. Brick producers will continue to be worst affected due to their high level of dependency on housing newbuild, which is estimated to account for around 60% of usage, and pressure on margins is exacerbated by the impact of rising energy costs on their overall cost-base.
AMA’s longer term forecasts are relatively optimistic and indicate the start of a recovery in 2011, underpinned by Government commitments to urban regeneration, increasing the levels of new housing, public sector programmes such as Building Schools for the Future and the 2012 Olympic Games construction programme.
ENDS