The Economics Of The Brick Cycle and Its Effects on Firm and Industry Structure

Home and Abstract Introduction Brick Demand UK House Construction

The Economics of Brick Production

Increasing Concentration of the Brick Industry II III IV V VI VII VIII IX

Conclusions Brick Industry Other Cyclical industries -Christmas trees

  Conclusions

Conclusion

The brick industry has seen significant increases in concentration levels since 1950, with CR5 levels increasing from 40.1% to over 70% in 1982. This can be seen to be a continuation of a trend that started soon after the industry took its present form of being made up of permanent brick yards. In addition to this trend, significant changes in the ownership of brick yards within the industry has occurred since the 1960’s, when some firms first merged with companied with large interests outside the industry. Today, only two of the ten largest firms in the industry are independently owned.

The trend towards greater concentration levels and large company size is only partly explained by the growth of M.e.s. levels since these are still relatively low in the non-fletton industry whilst those in the fletton industry are not large enough to explain LBC’s 100% monopoly, or its recent take-over. Foreign trade has had no direct influence on the industry and rates of technological change are low within the industry.

Instead, much of the rises in concentration levels and the changes of ownership can be said to have been caused both by the inherent inability of the brick industry to survive it in perfect competition and by the fact that larger groups are able to benefit from lower costs when production levels have to be altered.

The brick industry can therefore be said to be one where concentration levels have increased and firm structures changed largely as a result of fluctuating levels of demand. This fluctuation is very likely to continue into the future, and because of this, changes in industrial structure, and more particularly, firm structure, are also likely to continue with their present trend, although this may be tempered by an increasing demand for more varied bricks caused by a desire for more individuality in the building industry.

 

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