Construction Enquirer News Brick and block producer closes Bison precast site in face of margin pressure on ‘grey concrete’ products
Masonry products giant Forterra is planning to spend £27m on its Wilnecote brick factory to produce a wider range of high-end bricks for commercial and specification markets.
The investment will up production capacity by 20% or 6m bricks a year, including greater numbers of the famous Staffordshire blue bricks.
But in the short term the factory will be closed for 9 months in 2022, while a new kiln, dryers and handling equipment are installed.
Forterra also announced plans to close its general precast facility at Swadlincote, Derbyshire following a review of the Bison precast business.
The firm said: “Significant progress has been made in focusing upon added value products over commoditised grey concrete where margins have been under growing pressure.
“Focusing on a smaller range of higher value products will necessitate a reduction in the required production capacity and manpower and as such we have now taken the decision to close the general precast facility at Swadlincote.”
Production will now be focused on its Somercotes manufacturing facility in Derbyshire which is targeting higher margin modular façade products for the fast-growing off-site sector.
This encompasses both heavy precast concrete products such as brick-faced concrete sandwich panels and also its SureBrick mechanically fixed brick slip façade system and the Quickwall glued masonry solution.
Announcing the outcome of the strategic business review and strong first-half results, Stephen Harrison chief executive officer, said: “The current strong trading conditions appear set to continue in the second half of the year with our customer base signalling that they expect current levels of demand to continue.
“However, we remain watchful that ongoing economic uncertainty surrounding the longer-term impacts of the pandemic, coupled with the shorter-term effects of the present shortages of labour, materials and transport across the wider sector could potentially impact demand for our products.”
Harrison added that with production generally running at full capacity and with inventory levels across the industry now at historic lows there was little opportunity to significantly increase sales volumes in the short-term.
He said in order to ease pressure on deliveries Foterra had recently agreed to buy 20 delivery vehicles at the end of their lease term.
“With replacement new vehicles now arriving this will allow us to increase our fleet of specialised crane equipped delivery vehicles to 175, providing a valuable uplift in capacity once the additional drivers have been recruited and trained. ”
Over the first half, Forterra returned a £27m pre-tax profit after a £23m loss over the same period in 2020. Revenues from bricks and blocks are now slightly ahead of 2019 levels helping to restore revenue to £180m.