BDS publish annual building block report
Limited recovery in the building blocks market offers little solace to the industry with further declines expected
THE market for building blocks in Great Britain fell by nearly 50% in the period 2007–2009 and companies will take little comfort from a 2% increase in the market during 2010, say industry marketing consultants BDS Marketing Research Ltd, who are expecting further falls in the market in both 2011 and 2012.
According to the consultancy, increased activity in the housing and commercial sectors was the basis of the market improvement during 2010. Blocks suppliers also benefitted from an increase in the popularity of traditional wall construction using blocks, as well as a return to the building of more houses than flats, which requires more units for each dwelling.
These trends are analysed in BDS’s latest annual report on the industry entitled: ‘Estimated market shares of concrete block companies in Great Britain’, which gives an estimate of the output of each of the 100 plants operated by around 50 companies in the industry.
The consultancy estimates that Tarmac continue as the largest block company in the industry, followed by Hanson. However, these two companies have been at the forefront of cutting industry capacity, which has resulted in them losing 5% of their combined market share since the beginning of the recession.
One effect of this, say BDS, is that, in aggregate blocks, no one company can now claim to cover the whole country. This is now a regionalized business with a different market leader in most regions.
Likewise, plant closures have not been uniform across the whole country, with BDS reporting anecdotal evidence that suggests there are some shortages, particularly in the South East, while some smaller independent businesses have been able to take advantage of the slight upturn in the overall market and plant closures elsewhere. Despite this, industry stock levels remain at historically high levels, which will make it difficult for block companies to increase already weak margins, particularly with the market drifting lower.
BDS say they do not see the picture improving through 2011 or 2012, with further drops in demand forecast as public sector investment is cut back while the early recovery in the housing market appears to be faltering.
However, growth is expected to return to the sector in 2013, bolstered by an increase in private construction plus the fact that, by then, cutbacks in the public sector will have started to work through the system. Nevertheless, by 2015, demand for building blocks is still expected to be 40% lower than in 2007.
For further details contact BDS Marketing.