The decline in demand for new housing has led brick giant Forterra to mothball its Howley Park Plant in Dewsbury, West Yorkshire.

The firm recently opened its new Desford Factory in Leicestershire, significantly increasing its brick production capacity – but at the same time, demand has fallen due to rising interest rates.

Earlier this month, Infrastructure Intelligence reported the latest PMI survey showed construction sector growth in April was somewhat “lopsided” with economists raising concerns over the continued decline in housebuilding.

The latest reduction in residential building was the fastest since May 2020.

The latest survey on construction from the Office for National Statistics (ONS) also reported a £607m drop (18.4%) in private housing new orders was seen in January to March 2023, compared to the previous quarter.

Neil Ash, CEO at Forterra, said the firm would be supporting staff facing redundancy from the Howley Park plant in the weeks ahead.

“A combination of factors have led us to the difficult decision to mothball our Howley Park plant in Dewsbury, West Yorkshire from June 2023,” he confirmed.

“The September 2022 budget resulted in a sudden rise in interest rates, which has led to an unexpected reduction in demand for new homes. 

“At the same time, we are opening our new Desford factory in Leicestershire, which will increase our annual brick production capacity by 120 million bricks. 

“Unfortunately, this means we are now seeing a fall in demand at the same time as our production capacity is increasing, which has led to a significant imbalance between sales and production.” 

He added this has left Forterra with “no alternative” but to temporarily reduce its production of bricks. 

“After considering a number of alternatives, mothballing our Howley Park plant remains the most suitable option,” he said. 

“This is a difficult decision, which we have not taken lightly and only after a thorough evaluation of the current market. 

“We will shortly be entering a period of consultation with our staff to ascertain whether there are any viable alternatives to redundancy, including any suitable alternative employment at our other sites. 

“We sympathise with the uncertainty this creates for our team, and we will be offering them our full support in the weeks ahead.”

 Earlier this month, the Bank of England raised interest rates for the 12th consecutive month in a row, from 4.25% to 4.5%.

This put interest rates at the highest level for 15 years. 

Speaking before the interest rise on May 11, Dr John Glen, chief economist at the Chartered Institute of Procurement & Supply (CIPS), said recent interest rate rises will continue to hamper consumer demand for some time to come. 

Anticipating the expected rate rise on May 11, he added there will be concerns that “things will get worse before they get better for UK house builders”.