Britain’s two biggest brick makers planning 600 job cuts

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Britain’s two biggest brick makers are planning to cut 600 jobs as they brace for an economic downturn over the coming months.

Ibstock and Forterra both issued statements this morning announcing redundancy plans.

Although construction is forecast to get back to normal next year, brick demand could remaining down by around 20 per cent.

Ibstock said up to 375 jobs, around 15 per cent of its workforce, could be affected as it looks at closing sites down.

Based in north west Leicestershire, it is the UK’s biggest brick maker, with revenues of £409 million in 2019.

Forterra said its restructuring plans could lead to the loss of around 225 jobs, primarily from its concrete products facilities, particularly Swadlincote.

It is the country’s second biggest brick maker with around a third of the UK brick and aerated concrete block market.

Forterra has nine brick factories, making around 590 million bricks a year, and is in the process of building Europe’s biggest brick factory in Desford, west Leicestershire, which opens in 2022.

Forterra had revenues of £380 million last year and shares were up around 5 per cent today.

Ibstock’s new £55m Leicestershire factory can make 100m bricks a year

Here is what Ibstock said:

Demand for its bricks was down 90 per cent year-on-year in April.

Since then it had seen a “modest” improvement as the construction and housebuilding sectors started to come back on-line, but sales of clay brick were still down around 70 per.

Concrete sales are around half what they were at this time in 2019.

A third of its sites are now back open and measures to protect the business had included furloughing a significant number of its staff during the lockdown. It had also cut spending and put in “temporary” salary cuts for its board and executive leadership team.

It is now in the process of reviewing all of its operations in a bid to cut costs, which could include “selective site closures”.

It said: “We have entered into consultations with employees across the group as part of a series of restructuring proposals, with up to 375 positions, representing around 15 per cent of the group’s total workforce, potentially impacted as a result of these actions.

“Whilst the changes anticipated will ensure our business is adapted to the near-term industry demand outlook, we retain the flexibility to scale production back up, as and when demand recovers.”

The business said it continued to have “significant liquidity headroom” within its £215 million revolving credit facility to help it work its way through the downturn.

It said: “Current trading conditions remain difficult but the combination of the cost reductions, restructuring measures and improved liquidity have strengthened the group’s ability to meet current challenges and benefit from the eventual recovery in its core markets.

“As a result of current unprecedented levels of uncertainty, it is not possible to provide an accurate assessment of the trading outlook for the current year, and accordingly, guidance remains withdrawn.”

Here is what Forterra said:

Forterra, which is based in Northampton, said sales were down 86 per cent in April and 62 per cent in May, and orders were now around half what they would normally be.

Some 12 of its 18 sites are open, with most of the rest expected to catch up by July.

It said: “Economic and industry forecasts indicate a prolonged impact from Covid-19 on the UK economy and more specifically the construction sector.

“Although the Construction Products Association’s most recent forecast anticipates the residential construction market will recover during 2021, output in 2021 is forecast to be approximately 20 per cent lower than in 2019.”

Its plans include changing shift patterns and centralising the manufacture of all of its precast concrete flooring products at its Hoveringham facility in Nottinghamshire.

That would mean mothballing its flooring manufacturing site at Swadlincote, in Derbyshire, once current orders are processed there.

It said: “These proposals will not affect our ability to service key customers or our specialist precast concrete facility at Swadlincote.

“These actions, if implemented, will regrettably lead to the loss of approximately 225 jobs, primarily from our concrete products facilities.”

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