Brick firm hit by housing crisis

The owner of Baggeridge Brick today issued a profits warning in the wake of the collapse in UK housebuilding.

Austrian giant Wienerberger, which makes nearly 10 billion bricks a year, said its earnings over the last six months would be 10 per cent lower than at the same point last year due to the global economic downturn, including in the UK. The latest bad news comes after the company warned in May that around 80 workers at its West Midlands brick factories would be laid off for up to three months later this year.

The housing slowdown has slashed demand for bricks and Wienerberger, which bought the plants at Kingsbury and Hartlebury, near Kidderminster, in its £100 million takeover of Baggeridge Brick last year, said it was being forced to cut production.

Two plants in the South of England were mothballed immediately with the loss of 80 jobs, but the two plants near Kidderminster and a third at Warsley near Tamworth, which employs around 50 people, will all close at the end of the year for between eight and 12 weeks. 

The 130 workers will all be laid off for that period.

The Sedgley works, close to Baggeridge Country Park, was not affected.

UK revenues account for around seven per cent of Wienerberger’s earnings of £2 billion last year. 

But the mortgage famine has hit new home sales and building activity across the country. The Home Builders Federation has estimated that between 80,000 and 120,000 homes will be built this year, compared to 190,000 in 2007. The UK’s major housebuiling firms have announced 5,000 job cuts in the past week alone. 

Wienerberger also spoke of shrinking activity elsewhere in the world. In the US market there was a 40 per cent drop in housing starts since the beginning of the year. 

There was also “no recovery” in sight for Germany.

But demand for new bricks in Russia and Poland remained high, the group said.