Housing crisis demolishes construction industry

by Kate Pritchard - Monday, 9th June 2008 -

Wienerberger, one of Britain’s biggest brick makers and the latest casualty of the housing market slump, hit the headlines today as it prepares to close two of its factories. Entrepreneur Gerard Abbott-Drake says his sector – the finishings trade – is next on the hit list.

Abbott-Drake is the co-founder of Go Interiors, one of the country’s largest suppliers of dry lining, suspended ceilings, partitioning and insulation materials. He set up the Harpenden-based building materials firm in 2001 with business partner John O’Leary – and has built it into one of the fastest-growing companies in the UK.

But as Britain grapples with a sharp slowdown in housing production, Abbott-Drake is preparing for a rough ride.

“You build from the ground up. We’re in the finishings trade so we’ll be the last in the cycle to feel the effects of the slump,” says the 40 year old. “Construction projects are being put on hold and we’ll feel the ramifications of that in the next six months or so.”

“We’ve just done £20m in sales. In the next financial year, we’ll turn over £25m. Yes, we’re still growing but we’ve put the brakes on opening up new depots.”

Abbott-Drake is having to deal with the double whammy of sky-high prices. “Steel has suddenly shot up by 30 per cent,” he says. “We sell at least £3m of steel each year – so that’s a huge hit. Those costs are passed on to our customers, which means that developers and contractors will have to look twice at whether they use steel or go back to traditional timber.”

What’s to blame for the hike in steel prices? “Lakshmi Mittal,” chuckles Abbott-Drake. “Everyone tries to blame China, India and Russia but I think it’s down to him. He wants to be the richest man in the world.”

While many firms in the construction industry are laying off staff (Wienerberger’s chief executive Wolfgang Reithofer says 80 jobs will go), Abbott-Drake is holding on to his employees: “I can’t see us putting a freeze on recruitment and no, I don’t expect any redundancies. In fact, we’re looking at taking on more sales staff. In a downturn, we have to be more proactive.”

Picture source

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