Not Enough Bricks In The Wall

Could a shortage of bricks really derail the UK housing industry?  Construction News asked Alex John, Director at Livingstone London, for his insights into the potential consequences of this shortage.

Sounds farcical, but yes, it’s true!

The UK is currently experiencing a huge shortage of bricks as a direct consequence of the 2007/2008 economic crisis.  Waning demand for building materials occurred as the housing market declined drastically during the recession, leading to brick production halving.  This led to multiple closures; 19 brick plants have closed in the last five years and huge redundancies saw the construction workforce decrease by 15%.  The UK ended up sitting on stockpiles of bricks – an estimated 1.2 billion unsold.

Resurgent demand

Fast-forward six years into an improved economic environment with a resurgent new housing market thanks to Government schemes such as HelpTo Buy. House builders have Government targets to meet (250,000 new homes to be built annually), but the shortage of building materials is hindering construction sites across the UK.

Brick manufacturers were initially able to cope with the increase in demand by running down stocks, but soon the reserves were exhausted and construction companies are now being left with long lead times for their material orders, forcing some to order from abroad.

The industry is responding to the surge in demand but playing catch-up will take time, and with fewer active brick plants in the UK and the loss of an estimated 358,000 foreign construction workers, who left during the down-turn, it’s not going to be a quick turnaround.

After closing five plants and reducing their workforce by half during the recession, leading building material manufacturer Hanson has reopened its mothballed Cloughton factory to help cope with demand.  Ibstock and Wienerberger took similar action during the downturn and are also struggling to keep up with orders; Wienerberger has had to close its order book for 2014.  It seems the remaining factories just cannot produce bricks quickly enough.

Knock-On Effects

The Federation of Master Builders (FMB) trade survey for Q1 2014 found that 79% of participants believe an increase in material prices will occur in the next six months, with no-one believing a price drop will happen.  This is consistent with the 7.2% increase in brick prices in the 12 months to March.  The FMB said that this lack of materials risks “scuppering” the ability of building material manufacturers to keep up with rising demand.

The Royal Institute of Chartered Surveyors also recently reported scarcity of materials as a leading impediment to growth.  They reported that 40% of surveyors believed building material shortages were delaying building activity.  But it’s not just materials that are scarce, 51% of surveyors believe skill shortages are inhibiting activity too.

Further concern is rising over material shortage delays as projects funded under the 2011/15 affordable house programme need to be completed by 31st March 2015 or land owners will be forced to pay back the grant.  The delays are being exacerbated by house builders being forced to alter their planning consents if they change the materials used, which many are doing to avoid the lengthy lead times.

Who is Benefitting?

As the clay brick shortage bites, sales of concrete bricks are soaring.  Concrete brick manufacturer Edenhall is experiencing increasing demand for their concrete brick products and are taking orders from major house builders such as Barratt and Taylor Woodrow.  Concrete bricks faced with sand are also becoming more popular with builders because they are a good aesthetic match for clay bricks.

Smaller house building companies are turning to timber-framed construction methods, similar to those common in the US, benefitting the UK timber industry.  Others to benefit include manufacturers of alternative construction materials who will prosper as house builders look elsewhere to source their materials.

Final Word

So yes, although seemingly farcical, the brick shortage really is wreaking havoc in the UK housing industry.  But while brick manufacturers play catch-up, alternative material providers which are enjoying topped up order books can make the most of the growing opportunities headed their way.

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