Concrete products industry responds to increased demand

08 September, 2017

First published in the September 2017 issue of Quarry Management

The concrete products industry in Great Britain covers a broad umbrella of market sectors that between them produced around 30 million tonnes of products in 2016. The industry has an estimated combined value close to £2 billion and is a major contributor to the economy. The key market sectors include concrete blocks, roof tiles, flooring products (hollowcore and beam & block), drainage products, block paving, paving slabs and structural precast.

There are more than 570 individual production facilities currently operating in Great Britain, operated by around 430 separate companies. These range from major national and multinational businesses with multiple production units and interests in more than one sector, to regional operators with a number of plants, to independent operators with one plant servicing a local market for a particular product.

These are some of the findings from recent research carried out by BDS Marketing Research into the industry. The latest report published by BDS related to the market, entitled ‘Directory of Concrete Products’, provides details of all of the companies and plants, including company and location information as well as the main products manufactured at each plant.

The seven main product sectors identified above are estimated to represent around half of the total industry value, and are each thought to be worth more than £100 million. The largest sector by value is thought to be the concrete block market, accounting for in excess of 20% of all concrete products sales last year.

Output in the concrete block market is concentrated among a group of producers with shares of around 5–15% each, totalling nearly 70% between them. The concentration in the aircrete sector is much higher, with three companies accounting for more than 95% of production. The market for all blocks has seen good growth over the last decade, but is still around 20% below pre-2007 recession levels.

The three largest companies in the concrete products industry overall are thought to be Marshalls, FP McCann and Forterra, all of which have shown growth in their latest published accounts. Marshalls reported turnover up in 2016, by around 4% to £397 million. The company holds leading positions in the concrete block paving, paving slabs and kerbs markets, with an estimated market share of 40–45% in each sector. FP McCann are the leading producers of concrete pipes and associated products, and are active in the civil engineering and structural concrete area of the industry. The business had a turnover of £227 million in the latest financial year. Forterra, formed when private equity company Lone Star purchased Hanson Building Products from HeidelbergCement in 2015, saw their first full year as a listed company result in sales of £295 million, although this figure also included sales of clay bricks. FP McCann and Forterra have both grown further in recent months, each acquiring a plant previously operated by Bison Manufacturing.

The state of the house building industry is a significant influence on the performance of concrete products manufacturers. Current estimates suggest that existing housing provision in Great Britain is around 1–1.5 million units short of demand, while waiting lists for social housing amount to around 1.5 million households. Latest figures on house building published by the Government indicate new starts were at around the 185,000 level last year. Whilst this is an increase of more than 10% against the previous year, it is still short of the Government’s target of 200,000 new dwellings per annum.

The last couple of years have seen a wave of new investment among producing companies as they respond to growth in demand for their products. In the concrete block sector alone, BDS have seen new plant investment, or capacity brought out of mothballing, by leading producers including H+H, Tarmac, Plasmor, Aggregate Industries and Thomas Armstrong. In addition, BDS have seen, through their ongoing subscription-based service monitoring all planning authorities in Great Britain, proposals for 10 new concrete block plants in the last 24 months. The two largest of these schemes would have the capacity to produce almost 50 million blocks per annum between them.

Other recent planning developments in the industry have seen proposals for new plants specifically being built to support major infrastructure projects. These include two separate production facilities for precast concrete pipes and structures for the Hinkley C Nuclear Power Station Project, and a precast concrete tunnel segment manufacturing facility to supply the Thames Tideway Tunnel project. A further proposal outlines plans for a new railway sleeper production plant that will help to supply the HS2 project. It is likely that this trend will continue as the Government, through the Infrastructure and Projects Authority, proceeds with other major infrastructure projects across Great Britain over the next decade.

Elsewhere, new planning developments identified include proposals for around a dozen facilities that will increase production capacity of drainage, flooring, walling, roof tiles, concrete bricks and other precast concrete products.

The concrete products industry in Great Britain has been returning to growth in recent years and this is likely to continue in the mid-term, at least. Companies are responding with increases in production capacity that will ensure they are in a position to respond to further growth in house building and major infrastructure projects.

BDS Marketing Research is a marketing consultancy that publishes reports on the heavy building materials industry, including aggregates, ready-mixed concrete, asphalt, concrete products, cement and waste. The consultancy is also commissioned by individual companies to undertake marketing work, such as market and customer research, new product development, due diligence and acquisition appraisals. For further information, contact Andy Sales on tel: (01761) 433035; email: andy.sales@bdsmarketing.co.uk; or visit: www.bdsmarketing.co.uk