Building block companies need to reduce capacity, again!

SEVENTEEN building block plants have closed since 2006, equating to 14% of capacity, while over the same period demand for building blocks has fallen by 40%.

The industry has struggled with too much capacity for several years and the current recession has made this worse, therefore further works closures should be expected, according to a recent report published by BDS Marketing Research Ltd.

BDS are forecasting some recovery in the blocks market in 2010 and 2011 as house building begins to recover from the current low level. Moreover, mortgage lending is increasing and house builders are reported to be re-starting activity at some sites. However, BDS expect it will be next year before building block producers begin to see the benefits.

By 2012, however, BDS believe that recovery will have stalled as cutbacks in government expenditure will affect the construction of schools, hospitals and other public buildings, even though house building will continue to recover. By 2012, BDS are forecasting demand 30% lower than 2006, and unless the industry cuts capacity further, companies will continue to struggle with declining margins.

The blocks industry has benefited from the continued construction of public buildings, while over the last two years supplies have collapsed in the private sector. From 2010, however, the roles are expected to be reversed.

The report from BDS – entitled ‘Estimated market shares of concrete block companies in Great Britain’ – outlines an estimate of the output made for all 52 companies and over 100 plants in the industry. BDS estimate that Tarmac continues as the largest block company followed by Hanson, Aggregate Industries, H&H Celcon and CEMEX, with these five companies having just over 60% of production.

Further details of the report are available by contacting BDS Marketing.