THE State’s two major brick producers say they are not concerned by BGC’s planned brickworks operation, which could be up and running in the next couple of years.
BGC has revealed it has the equipment for a brickworks in a Welshpool warehouse but its plant is not expected to be ready for several years, while the extensive process of community consultation and environmental approval is undertaken.
But when, and if, it comes on stream BGC’s vertically integrated business structure virtually guarantees its own brick-making facility a major market share.
Perth’s two other major brick producers, Austral Bricks and Midland Brick, do not appear to be nervous about the potential threat to their market share, however. Both have plans to upgrade current facilities amid what has been a major supply shortage.
Austral CEO Lindsay Partridge said the economy and housing statistics remained strong, and that Austral would simply respond to market needs.
“We are not overly concerned about BGC coming into the market – they [BGC’s building operation] are a customer of ours and we believe that they will remain so,” Mr Partridge said.
“At times of peak demand, we may even purchase from them.”
“We would like to have a situation where we can take some of our old kilns offline, depending on market requirements.”
Midland Brick general manager Peter Hogan said there was a robust demand for all building materials at the moment, and Midland Brick would be adding to its production capacity with the recommissioning of a kiln, and would be building a new kiln.
“We are not afraid of competition, and when capacity is added, the issue of oversupply happens in any market,” Mr Hogan told WA Business News.
“We have plans of our own and all we ask for is a level playing field,” he said.
Mr Hogan estimated that approvals were about six weeks away for Midland Brick’s new kiln, and construction would begin immediately they were received.
Strong housing starts in the past few years led to a situation where demand for bricks outstripped supply in Western Australia. Delays of up to six months were not uncommon on some lines.
And while demand has eased somewhat in recent months, both Austral and Midland Brick say home builders and renovators can still expect to wait several months for some lines.
HIA Executive Director (WA) John Dastlik said with the present current rate of supply and high levels of demand, there was a lot of strain on existing manufacturers.
“The addition of BGC to the market will provide competition and greater choice, which in the end is better for the consumer,” he said.
“There will be some oversupply eventually, but it is necessary to take into account demand.
“There are more suppliers than there is need for virtually every product in building, except bricks.”