CSR and Boral have announced the intention to form a joint venture of Australian east coast brick operations, citing reduced brick usage as a major cause for consolidation.
The companies have proposed to combine brick operations in New South Wales, Victoria, Queensland, South Australia, Tasmania and the ACT. The move is subject to clearance by the Australian Competition and Consumer Commission (ACCC).
A joint statement from the companies explains brick demand in Australia has experienced a sustained structural decline, with bricks becoming an increasingly smaller component of the broader cladding market.
Despite a general increase in construction activity over this period, total brick production in Australia has fallen by 46 per cent from its peak in 1981, according to Boral and CSR.
The situation is put down to factors including:
A change in the dwelling mix away from detached houses (which are traditionally more brick intensive) towards multi-residential units and in particular high-rise construction which tends to favour use of alternative cladding materials compared to brick.
Changing construction methods, which have virtually eliminated double brick construction from detached houses on the east coast of Australia and substituted this with frame and cladding systems using single brick veneer as well as alternative cladding products.
Emerging trends in external façades in housing that are moving toward rendered walls and alternative cladding materials, including concrete panels, masonry blocks, fibre cement, metal products, timber and glass products.
The joint company statement says the reduced brick demand has impacted the brick industry as a whole, and particularly Boral and CSR operations, as declining capacity and reduced plant utilisation has resulted in plant closures and curtailments.
The businesses claim the proposed transaction will enable them to access additional operational and overhead efficiencies that would otherwise be unavailable to the parties acting independently.
CSR’s CEO and managing director Rob Sindel said: “This joint venture is about retaining manufacturing in Australia and maintaining clay bricks as a choice for consumers in a broader cladding market. It is about strengthening the opportunity for employees and reinvesting in the industry while delivering satisfactory returns through the building cycle.”