Alternative construction materials have had a dampening affect on the industry, but a resurgence is in the offing. By JASON BAKER of IBISWorld.
By Jason Baker
After a year of no growth and several before of low growth, bricklayers are looking forward to some better times over the next five years.
IBISWorld estimates the $1.4 billion bricklaying industry will grow at an average annual rate of 1.3% over the five years to 2007-08.
The decline in the volume of clay brick used, as other building materials become popular, and flat average cyclical growth in the value of new housing construction during the mid-2000s, was offset to some extent by cyclical growth in the value of home improvements and non-residential building construction.
Revenue expanded as demand remained strong for bricklaying services during 2003-04 as the value of total residential building construction climbed. But it declined in 2004-05, and again in 2005-06, thanks to flat average cyclical growth in the value of new housing construction.
Demand stabilised in 2006-07, but IBISWorld predicts a substantial improvement in demand during 2007-08, stemming from the cyclical upswing in the value of total housing construction and the continued moderate growth in the value of non-residential building construction.
IBISWorld estimates that this industry will grow at an average annual rate of 4.1% over the five years to 2011-12.
The trend towards the substitution of traditional clay bricks with alternative building materials will constrain demand for bricklaying services in most non-residential building and multi-unit apartment markets.
The housing construction market, which accounts for a majority of bricklayer contractor revenue, is predicted to grow in the short term before a minor contraction in investment during 2009-10 associated with softer general economic growth conditions.
Therefore in 2008-09 industry revenue will expand, followed by slight contraction in 2009-10.
Resurgent growth in the downstream housing construction market from 2010-11 onwards, coupled with solid growth in the non-residential building market, will underpin strong demand for bricklaying services, and result in strong growth in industry revenue.
An initiative launched by industry association MBA Victoria is hoped to assist combat the shortage of skilled bricklayers evident across the country due to the industry’s high attrition rate and the scaling back of apprenticeship numbers during fluctuations in demand.
Key success factors for operators in the industry
- Market research and understanding. An understanding of trends in the housing construction cycle enables contractors to better manage cashflow and promotional activities.
- Having contacts within key markets. Close relationships with residential construction companies within the target market strengthens the capacity to secure ongoing contracts.
- Having a good reputation. Differentiation in this market is generally based on the reputation of the contractor to provide bricklaying services of a high quality and within the required time and budgetary constraints.
- Business expertise of operators. Successful contractors demonstrate a sound knowledge of business management and the capacity to manage cashflow during periods of wide cyclical fluctuations in demand.
- Ability to manage external (outsourcing) contracts. Successful contractors generally demonstrate the capacity to expand their business through sub-contracting during periods of high demand, rather than expanding their permanent workforce.
IBISWorld supplies business information databases, including industry reports, company reports and business indicator reports. www.ibisworld.com.au