Housebuilders are
taking greater control of their supply chains as supply of materials gets
stretched, industry analysts Glenigan have revealed.
Manchester-based
housebuilder Urban Splash has bought the loss-making Building Systems business
from materials group SIG.
Urban Splash
chairman Tom Bloxham said: “[This] purchase is a way to vertically integrate
our business and give us control of the production of our houses.”
Building Systems had
revenue of £9.2 million in 2016 but lost £5.7 million and Urban Splash paid
just £1 in a deal which includes a factory employing 70 staff at Alfreton in
the East Midlands.
Persimmon, which
already has its own timber frame operation, Space 4, and a manufacturing plant
in Harworth with capacity to produce 80 million bricks a year, will now start
manufacturing other materials.
Persimmon acting
chairman Nigel Mills said: “We have now taken the decision to manufacture roof
tiles and expect to establish a new plant at Harworth during 2018 with the
intention of commencing group supply the following year.”
This month, a 25,000
sq m factory opens in Harrogate built by Ilke Homes, which is a joint venture
between housebuilder Keepmoat and offsite specialist Elliott Group.
Ilke has recruited
150 factory workers and hopes to build between 300 and 350 homes in 2018.
The workforce could
rise to 800 people by 2020 or 2021 if a target of selling 2,000 homes a year is
reached. In the long-term, Ilke hopes to sell 5,000 homes a year by 2023.
Ilke will transport
the modular homes across the UK with many going to social housing but private
housebuilders are also expected to be clients. These moves are being replicated
across the industry.
Legal & General
opened a 550,000 sq ft factory in Selby last year to manufacture offsite
housing in Selby, while Ashley House took majority control of F1 Modular, the
offsite business that is the only modular contractor to hold a place on the
local government LHC National Framework NH1.
Taylor Wimpey
recently warned: “Availability of materials is generally in line with demand
but there remain pinch points with key products such as bricks, blocks and roof
tiles. The cost of these key products has risen significantly and whilst other
material costs have been stable in 2017 we are experiencing more cost pressure
coming into 2018.”
Earlier this year,
Lloyds Bank’s latest annual housebuilding report revealed that 68% of
housebuilders are investing in modular housing and 56% are putting cash into
panelised systems of construction.
According to the
Lloyds’ report, average investment in new building techniques by housebuilders
now comprises 24% of turnover compared to 20% five years ago.
Glenigan’s economics
director Allan Wilen commented: “These changes are because housebuilders are
concerned about their margins.
“Skills shortages
are endemic and the threat of tariffs when the UK leaves the European Union
both loom large and bigger housebuilders are likely to explore similar deals
going forwards.”
According to the
Builders Merchants Federation, 78% of construction products originate in the UK
and the balance of 22%, notably timber and tiles, are sourced from abroad.
Recent industry changes suggest that housebuilders may try to tip this ratio
even more in favour of UK production.
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