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Who are the ones to watch in the materials market? Richard Stirling analyses the sector, identifying the top names

The materials market is characterised by consolidation or vertical integration, as major firms hungrily buy their suppliers and customers to control costs, from quarry to construction site.

Approximately 80 per cent of aggregates go into downstream products such as precast or ready mix concrete, so it makes sense for the big players to have control of that supply chain too.

The diverse nature of these firms makes it near impossible to break down each by activity or material. This is further exacerbated by the fact that heavyside products suppliers outside the brick making industry are all parts of international giants after Castle Cement owner
Heidelberg bought the last of the UK independents Hanson.

One of the quirks of the credit crunch is that the industry is kept waiting to see the next chapter in the story of Tarmac, as owner Anglo American has shelved plans for a sell-off until conditions improve.

Construction News has spoken to senior representatives from each specialist sector to gauge which firms they feel represent the major players in each market.

The research has then been used to chart the major companies in order of their UK presence.

Cement

The cement making industry has a combined turnover of about £775 million a year and has 19 plants around the country.

Producers experienced a good year in 2007, with domestic sales increasing by 4.8 per cent to 11,894,000 tonnes. The industry even experienced a blip when demand outstripped supply.

The UK reflects the cement industry across the rest of the world market and is dominated by Lafarge. The company plans to produce 85 per cent of the world's cement in 2008, excluding China.

Its income from cement production rose 18 per cent in 2007. Lafarge has seven cement works in the UK, with 14 depots and terminals. The company has invested £15 million in a rail depot at its Hope Works in Derbyshire to transport to the market in the South-east.

It also has the capacity to import cement from the continent through its depots at Northfleet and West Thurrock.

Companies are cautious to reveal how much cement they make, but Lafarge UK has capacity to produce 6,000,000-tonnes, although the market is currently experiencing a decline in demand.

Aggregates

After a few good years, the aggregates industry is feeling the pinch and has experienced a steep decline in the demand for sand and gravel and even crushed rock. A drop in house building and fall in road building contracts respectively are the cause of the slowdowns.

Tarmac is the largest quarrying company in the UK. The firm currently has 186 quarries, 105 of which are active. Tarmac has diversified its aggregates business by buying out Hanson's 50 per cent stake in the jointly owned United Marine Aggregates.

The business will put the company in good position for the South-east and it has already supplied projects such as the Channel Tunnel Rail Link at Ashford and King's Cross, the Emirates Stadium and the Swiss Re tower.

Concrete

The ready mix market is often a good indicator on the state of house building as the product is used early on in projects. Consequently, it is first in line to feel the pinch of any declines in orders.

Top ready mix supplier Cemex has not been immune to the downturn in house building. The company said its second quarter volumes dipped six per cent compared to 2007 after divestments were taken into account.

Hanson gains second place with 240 concrete plants and 23 per cent of the market.

Asphalt

While the industry waits for the sale of Tarmac, the company enjoys top position as asphalt supplier.

Tarmac has made a few wily acquisitions to give it an attractive role of supplier and contractor.

But, mining company parent Anglo American doesn't see Tarmac as a core business and would
like to offload it just as soon as we get through the credit crunch.

The company will prove an attractive proposition for its suitors, and braved escalating energy
costs to make a cool 41 per cent profit in the UK and 32 per cent across the rest of the world last year.

The asphalt market looks like it is buffered from the downturn in housing, and Tarmac has long
term maintenance contracts with local authorities such as Leicester and Nottingham councils.

But, whereas companies like Tarmac have enjoyed good business with road widening projects such as on the M25, it looks like the Highways Agency will favour hard shoulder running schemes in the future.

Bricks

The brick industry faces a double whammy of a fall in demand from house builders combined with soaring energy prices. Brick makers' profits will suffer greatly under this two edged sword.

Faced with massive fuel bills, Ibstock has warned its customers about a 15 to 20 per cent rise at the end of the year, with another possible rise next summer.

This makes it difficult to rank brick makers on output as UK production is currently at a chronic low. Producers are either rotating production around their factories, or taking
a long hard look at their most inefficient sites.

Ibstock's decision to stop production at its Lanarkshire factory effectively ended brick making in Scotland.

Charting brick makers is tricky in an industry with only four firms with more than one factory.

Ibstock comes out the overall winner of the facing brick market, although it is almost even with Hanson at 32 per cent market share. On overall fletton production, Hanson would nick the
number one spot.

Although it sits at number three with 24 per cent of the market, Wienerberger is the world's
biggest brick maker. It has bought its way into the UK with the acquisitions of thebrickbusiness and Baggeridge Brick.

Specialist brick maker Micklemersh lost out to Wienerberger on its bid for Baggeridge, but it
still braved a wet summer and increased production by 17 per cent and turnover by 13.7 per cent to £24 million.