LOCAL competitors are sceptical about the plans by construction, engineering and manufacturing company Buckeridge Group of Companies (BGC) to develop a $75 million manufacturing plant in Perth.
BGC, which currently buys the bulk of its bricks from Perth’s two brick manufacturers, Boral’s Midland Brick and Bristile’s Metro Brick, has announced plans to establish a new brick plant.
The plant will be built in Perth but BGC would not comment on its location. The company expects to claim a market share of around 25 per cent of the entire Perth market.
BGC director Julian Ambrose said the new plant would help alleviat the shortage of bricks that currently existed in Perth.
“This is a result of market demand, kiln closures and a lack of investment in new equipment by the existing manufacturers of clay bricks,” he said.
Mr Ambrose said the BGC brick plant would be the lowest cost producer on the market.
Midland Brick parent company Boral Clay and Concrete executive general manager Keith Mitchelhill said it was hard for a new entrant into the WA brick manufacturing industry to make good returns across the building industry cycles.
Mr Mitchelhill said that over the past five to 10 years, numerous brick kiln projects had been proposed, however, none had started because they were not economically viable.
“It is never hard to build a brick kiln but it is not easy to make good returns across the cycles for a new entrant,” he said. “I would be surprised if the economics of building a brick kiln for BGC were outstanding.”
While the peak in the building industry cycle presently being experienced was placing brick suppliers under pressure, Mr Mitchelhill said there was no brick shortage.
He said the difficulty in starting up a brick manufacturing plant was being able to provide the range of products that the customer demanded.
Metro Brick managing director David Gilham said the Perth market was not experiencing a brick shortage.
“The current capacity of WA brick manufacturing is higher than demand,” he said.
Mr Gilham said that most builders would not buy bricks from BGC because it was a competitor in the construction industry.
“This is not a viable business proposition,” he said.
Mr Gilham said BGC was not a big customer of Metro Brick and it would not affect the company greatly if it began to produce its own supply of bricks.
“The first step is to see if they do set up a plant, which is something that will take one to two years to do,” he said.
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