Cement manufacturers Cemex, Castle Cement and Lafarge have all moved to cut production and jobs over the last few months. Steel manufacturer Corus is also cutting UK production between now and December as the housing market has collapsed, hitting demand for materials.
Cemex this week announced plans to shut down its Barrington cement plant in south Cambridgeshire for good, leaving 87 people facing redundancy. "The move to potentially close Barrington’s kiln is part of a strategy to rationalise processes and implement costs savings wherever possible, following the recent downturn in the economy and the slow down in construction," said a statement issued by Cemex.
The closure of the cement plant is one of a raft of measures being taken by the company, said a Cemex spokesman. The spokesman said UK cement demand was expected to fall about 19%, with readymix demand to drop by about 20% on a like for like basis. Aggregates demand is predicted to have fallen by around 14% over 2008. Portland cement output is currently running at around 12M.t per year. "In the UK Cemex has already been working on improving efficiencies for several months," said the spokesman.
"Initiatives include prioritising capital expenditure and investment in new projects and in some cases putting these on hold; reducing the cement and aggregate fleets to improve productivity; reducing shifts, overtime spend and head count across the business by at least 10%; and closing and mothballing underutilised assets."
Castle Cement, which produces 25% of the UK cement demand, mothballed a plant in August, with the loss of 35 jobs. "We mothballed a kiln at Kelton," said a Castle Cement spokesman. "It was down for annual maintenance in August and it’s not been brought back in [to use]. It was part of the overall restructuring we had to do. We’re also reducing delivery fleet and taking vehicles off the road. There was a fall off in demand from March this year – 15% down year on year "We’re not sure yet if we’ve reached the bottom. We need to match production to likely demand. "The only good thing is we know it’s cyclical," added the spokesman. "The market will come back, but in the meantime, we have to take action and match production with demand. It’s a balancing act deciding how much production to cut. We have to be ready for the upswing."
Lafarge mothballed a kiln and two cement mills in its Westbury works at Wiltshire in September, cutting production in the plant to a single kiln and two cement mills. Half of the 130-strong team had to leave the site but consultation on redeploying them elsewhere with Lafarge is still ongoing .
The steel sector has also been hit by the slump in the market. Corus has announced that it will cut production of crude steel by 20% or 1M.t between October and December. Cuts are also thought likely to extend into the next quarter.
Many manufacturers are feeling let down by the government, after increasing production to meet demand created by government housing targets. "Manufacturers have geared up to a positive programme of works, for delivering the government’s house programme by 2020," said Martin Clarke, chief executive of trade association British Precast. "Now by no fault of their own, the market’s not there. It’s a serious situation in that next time we want the capacity we won’t have it and we will have to import. We would like to see the government positively discriminate for UK construction materials."
The Union of Construction Allied Trades & Technicians (UCATT) said off-site manufacture in the east of England was especially hit by the downturn. Some companies are making as much as 40% of their staff redundant, said UCATT eastern region secretary Brian Rye "There has been a real ripple effect with the sector struggling for orders since the housebuilding sector went into decline," he added. "We in the east of England region are in real danger of losing the capacity to manufacture the materials we need if these redundancies continue," he said. "Some of these companies may actually close and the reality is that they may not re-open. This presents real problems in that longterm damage will be done to the construction economy as well as the wider economy."