Boris’ brick: Made at home, but brick imports are rocketing
UK monthly brick import figures have almost doubled in each of the past three years. Already this year we have imported from The Netherlands and Belgium almost as many bricks in the first six months of 2014 as in the whole of 2013. That’s 441,000 tonnes of bricks in 2013 adding £40m to the balance of payments deficit and denying UK employment opportunities.
The import drivers are high UK energy costs for UK brickmakers, as we showed in our recent study, but there’s also spare brick making capacity on the continent: Our high energy costs are deterring investment in new brick capacity. Neither the brickmaking nor ceramics sectors have benefitted from the government’s £400m compensation package for energy intensive industries. About £85m has been paid out to date to compensate for the Coalition’s carbon tax on industry and the cost of the EU emissions trading scheme.
The positive news is that Ibstock has invested £22m in a new, super efficient brick manufacturing facility in Newcastle-under-Lyme, making it one of the most energy efficient of its type in the world, supporting 80 direct jobs and more indirect ones in the supply chain and helping to meet the increased demand for bricks across the UK. A few mothballed brick factories have been brought back into production, but according to Laura Cohen, Chief Executive, British Ceramic Confederation, we should be investing in new UK plant and creating new UK jobs to meet the high demand for new housing as well as just re-opening factories
But the three issues facing the industry are beyond a conference joke.
First, the need for a sustained high level of housing demand. Production in the UK brick sector was severely affected by the economic downturn and the decline in the construction sector. In 2007 2.5 billion bricks were produced by UK brick manufacturers, but this virtually halved to 1.3 billion in 2010. By 2013 the market had risen but only back to 1.6 billion. This resulted in 25 factories permanently closed – almost all brick producers – out of the 93 UK heavy clay factories that had been operational in early 2008.
We built 109,000 new homes last year but need 250,000 annually at a sustained level.
Second, support for industry’s energy costs from climate change policies. Energy costs at Ibstock, as we showed in Walking the carbon tightrope, have virtually doubled due to a combination of commodity cost rises and significant increases in climate related taxes and efficiency schemes. The company anticipates that the costs associated with climate related taxes and efficiency schemes will triple over the next seven years.
The heavy clay ceramics sector is not generally considered to be highly electro-intensive, yet electricity supplies currently account for around 30% of energy costs for both Ibstock and Marley highlighted in our study. An underlying aim of energy and environmental policy mechanisms is to encourage and incentivise energy intensive sectors in their transition to a low carbon economy.
Third, a new model linking industry and housing policy, where government creates the conditions for high demand over a long period, in return for which constructors commit to sourcing from UK supply chains; and where government supports energy costs in the transition. This calls for both the “convening” role of government to help join the dots between industrial and housing policy; and it’s “regulatory role” in pricing carbon but offsetting excessive policy costs.
But quite how this will be achieved whilst shrinking the role of government is hard to fathom.