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The depressed state of the construction industry since 1990 has resulted in difficult trading conditions for manufacturers of bricks and blocks. Unlike previous post-recession periods, construction has played virtually no part in the UK economic recovery, reflecting the high level of caution within the industry following the excessive boom of the late-1980s.
The total market for bricks and blocks is estimated at over £1 billion. Bricks have experienced a poorer market performance than blocks over the last decade, reflecting a gradual substitution of bricks. Facing bricks, however, have performed well increasing their share of the sector to over 75 percent in 1996. This growth has been at the expense of common bricks which have declined from 25 percent of sales in 1987 to less than 15 percent now.
In terms of supply, Hanson and Ibstock have consolidated their leading positions in the market with a combined share approaching 65 percent. Baggeridge, Chelwood and Ambion all have estimated shares around 7-9 percent, with the rest of the market accounted for by a declining number of independent manufacturers.
The blocks market also declined during the early-1990s but is forecast to experience stronger recovery in 1997/98. Demand for blocks has been buoyed by increasing substitution for bricks and development of new applications. Higher thermal and noise insulation standards have resulted in growth in demand for dense blocks, which now account almost 50 percent of sales, with aerated and lightweight products accounting for around 30 percent and 20 percent shares respectively.
Leading suppliers of blocks include Marley, Celcon, Tarmac, Marshalls, ARC Conbloc, RMC/Durox and Camas (now Aggregate Industries).
Distribution of bricks and blocks is highly concentrated with Builders Merchants accounting for an estimated 50-55 percent share, with direct supply and factors accounting for the majority of the rest. Wolseley, Jewson, Graham and Travis Perkins are the leading Merchant groups, with Jewsons emerging as clear market leaders following their acquisition of Harcros.
The factors sector is dominated by Taylor Maxwell, while direct supply to the major housebuilders and commercial developers also account for significant shares.
The housebuilding market has also experienced a substantial degree of rationalisation in recent years. Wimpey are now clear market leaders with around 7 percent following their acquisition of Tarmac's housebuilding operations. Barratt, Beazer and Persimmon each have 3-4 percent market share, with further changes in market structure likely as regional builders are acquired by larger national groups.
Prospects for bricks and blocks over the next few years are more optimistic than they have been this decade. Housing starts and new orders for commercial and industrial buildings are all relatively buoyant, which should continue into the near future.
The service sector of the economy is particularly strong which should feed through into good order books for new commercial properties. In addition, major new projects funded by the National Lottery and Millennium celebrations have been developed, while the Private Finance Initiative is finally gaining some momentum with public sector projects.
As a result, the next 2-3 years should see sustained growth in demand for bricks and blocks until the end of the decade at least, with longer term prospects more likely to be influenced by Government policy and the impact on the economy of attempting to achieve convergence with other European economies prior to joining EMU.
This comprehensive report represents a detailed assessment of the market, reviewing major trends, key factors influencing developments and future prospects for the sector. Analysis is both quantitative and qualitative, based on our substantial experience of the building and home improvement markets.
Text © 1997 AMA Research
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Last updated by Duncan Nottage 12th February 1999