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Market for Facing Bricks - Share by End Use Sector
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The overall bricks and blocks market
was worth over £1.25 billion in 2007, but rapidly deteriorating
market conditions have resulted in a substantial decline in
2008Demand for bricks and blocks is largely reliant on underlying
strength in the construction sector. Construction output rose by
7.4% in 2007 but has 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 5
years, has also undermined demand for bricks and blocks in the new
build sector.
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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 deterioriate
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.
Our longer term forecasts
are relatively optimistic and indicate the start of a recovery in 201l,
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.
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