Ibstock hikes brick production as UK construction market picks up
Brick manufacturer Ibstock has reinstated production capacity at several factories, providing a boost to Britain’s building materials shortage.
The move is a bet on the building market’s recovery, with higher production capacity ensuring the company is “well placed to benefit from the recovery as it gathers pace.”
Ibstock, which holds a 40 per cent share of the UK’s brick market, closed its Lancashire factory in 2023 and its Surrey factory in 2024 in response to a slowdown in the high-margin new-build sector.
The company’s CEO has previously warned that the UK faces a shortfall of 500m bricks if it wants to hit its 300,000-homes-per-year target.
Part of the problem is that the UK has not built 300,000 homes in a year since 1970 and fundamentally lacks the necessary infrastructure to do so. Last year, it built just over 100,000 homes.
The UK has a production capacity of about 2.2bn bricks per year, down from 7.8bn in 1970.
Lacklustre housing market hits brick market
A number of builders – including L&G and Tophat – have closed their factories even in the last two years in response to a lacklustre construction market.
It’s not as easy to increase supply as it is to chop it: building a new brick factory takes at least 18 months.
But while ramping up production is difficult even on its own, there’s also the issue of cost: increased demand and manufacturing costs, plus supply chain issues, have pushed up the costs of bricks in the last five years, which brickbuilders feel “unable” to fully pass on to construction companies.
This is a particular concern in relation to affordable housebuilders, which already struggle with razor-thin, often negative, margins.
Ibstock’s share price fell 15 per cent this morning on this cost concern, with Peel Hunt analysts blaming a “lack of cost recoveries from higher pricing”.
But CEO Joe Hudson said he was optimistic about the future of the market.
“We remain committed to taking steps to ensure we are well placed to support customers and benefit from the recovery as it gathers pace,” with Ibstock pointing to “significant unmet demand” in the market.