Learn About the Latest News on Building Optimism in the UK, Redrow to Be Acquired by Barratt, North Wales Hosts UK’s First Carbon Capture Cement Plant And MPs Advise Building to ‘Embrace Tech’

In today’s news, we will look into the construction optimism in the United Kingdom reached a two-year high. In the meantime, the largest housebuilder in the United Kingdom, Barratt, has agreed to acquire its competitor, Redrow, for a sum of £2.5 billion. In addition, the first carbon capture cement production facility in the United Kingdom is located in North Wales. On top of that, members of parliament advise the building industry to “embrace technology” in order to prevent falls from heights.

Building Optimism in the UK at Two-year High

Original Source: UK construction optimism at two year high

In spite of lower order books, UK construction business activity estimates are at their highest since January 2022, indicating a boost in optimism.

Despite a minor fall in industry activity, the index remained below 50.0 for the fifth month.

Still, the measure rose to 48.8 in January from 46.8 in December.

Civils remained strong, but housebuilding plummeted.

Civil engineering output was highest in January 2023 (index 49.8), while commercial activity held steady at 49.1.

House Building declined (index to 44.2), with anecdotes of low demand and a lack of work to replace completed projects.

Residential activity contracted at the lowest rate since March 2023.

New work barely declined.

New work fell for the sixth month in a row in January, but the fall was small.

Many companies reported a drop in new business, citing delayed customer decisions and depressed market circumstances, especially in house development.

Construction firms were hesitant about recruiting in January.

Total employment declined somewhat, but subcontractor usage was steady from the previous month. Subcontractor rates rose at the quickest pace since September 2023, despite a sharp rise in availability.

UK construction business optimism at its greatest since January 2022.

Despite weak order books, recent data showed company activity expectations rising sharply. Only 12% of respondents expect business activity to diminish, while 51% expect it to rise.

Lower borrowing costs and more consumer confidence could stimulate development in 2024.

Construction input demand fell for the fifth month in January, with survey respondents citing weak demand and inventory reduction initiatives.

The fastest input cost increase since May 2023 occurred.

As demand and supply recovered, suppliers’ lead times fell again, reducing delivery delays.

After three months of declining prices, building prices rose in January.

Some firms reported on increasing import prices, notably those with greater delivery expenses.

S&P Global Market Intelligence economics director Tim Moore said: “UK construction companies seem increasingly optimistic that the worst may be behind them soon as recession risks fade and interest rate cuts appear imminent. The possibility of looser financial conditions and a stronger economy boosted company activity forecasts to a two-year high in January.

Market semi-stable, eyes on Spring Budget

Gowling WLG construction partner Daniel Wood said: “Despite rising inflation, construction has remained resilient in terms of project commissioning and record revenue.

A rise in student accommodation commissions and commercial projects in town and city centres have offset a reduction in homebuilding.

The recent COP28 summit and climate-action measures to lower emissions in the building and construction sectors mean that profitability is not the primary objective for the sector. Thus, winning work, especially commercial projects, requires prioritising this aspect.

It will also be fascinating to watch if the Spring budget provides further government help for reducing planning issues and other impediments to these and other new projects in 2024.

Redrow to be Acquired by Barratt for £2.5bn.

Original Source: UK’s biggest housebuilder Barratt to buy rival Redrow for £2.5bn

Companies agree to an all-share bid to build a £7bn-plus entity.

Barratt, the UK’s largest housebuilder, will buy Redrow for around £2.5bn.

The two businesses have agreed to Barratt’s all-share bid, which will make it the country’s largest housebuilder.

The united group plans to build 23,000 homes a year and earn over £7bn. Tuesday’s financial markets ended at £7.2bn.

Both boards approve the purchase, as does Steve Morgan, who started Redrow 50 years ago and still owns 16%. Morgan claimed the merger will produce a “standout builder” that may speed up homebuilding.

Barratt shareholders will keep 67.2% of Barratt Redrow, while Redrow stockholders get 32.8%. New homes will be marketed under the Redrow brand and its Heritage collection added.

Mid-May shareholders will vote on the agreement, and the firms intend to finish it in the second half of the year.

It comes as builders face the worst housing decline since the financial crisis.

David Thomas, Barratt’s new CEO, said: “We respect Redrow, its strategy, leadership, employees, and high-quality homes and communities. The merger would benefit our employees, supply networks, and most crucially, customers by leveraging Barratt and Redrow’s capabilities.

On the news, Redrow shares rose 13% to 674p and Barratt slid more than 7% to 491p.

Redrow shareholders will receive 1.44 Barratt shares each Redrow share. Morgan’s investment is worth £373m at Barratt’s current share price, down from £400m on Tuesday’s closing price of 530p.

Redrow CEO Matthew Pratt holds £760,000 in shares, while CFO Barbara Richmond owns over £4m. Pratt will administer Redrow, while Richmond will oversee integration for 12 months.

Barratt chair Caroline Silver will oversee the amalgamated board.

I admire Barratt because of their quality-focused approach to homebuilding, Morgan stated. I believe the Barratt-Redrow merger with its three high-quality complimentary brands will produce a leading home builder and speed up the delivery of much-needed UK homes.”

Steve Hoey, CEO of Turning Lives Around and Homelessness Prevention Forum chair, tweeted: “Surely this will be the biggest builder; will they build what we need?”

This is Barratt’s second acquisition in 16 years after buying William Bowden for £2.2bn in 2007, making it the UK’s largest housebuilder. As a development arm, the corporation still operates David Wilson Homes.

Barratt finished 17,200 homes last year, outperforming Vistry Group with £705m in earnings on £5.3bn in sales. Vistry Group’s Bovis, Linden, and Countryside brands built 16,124 homes last year.

Redrow, the seventh largest builder, completed 5,400 homes last year and earned £395m pre-tax on £2.1bn in revenue.

Aynsley Lammin of Investec said, “The deal looks very sensible given the challenging planning and land backdrop, especially assuming sales rates and the profit outlook gradually improve from here. The all-share deal is smart, maintaining a strong financial sheet.”

Directors said merging will retain a better balance sheet, protect the group through the present market cycle, and provide a strong platform for higher shareholder returns over the medium term.

Through procurement savings and “rationalisation of divisional and central functions” in the company, the companies expect to save £90m a year in three years. Site and sales office staff should be unaffected.

Interactive Investors head of markets, Richard Hunter, said: “The move is a seismic shift for the sector, reflecting not only the economic challenges housebuilders have faced recently, but also a move to shore up the capabilities of two major players.”

North Wales Hosts UK’s First Carbon Capture Cement Plant

Original Source: UK’s first carbon capture cement production facility in North Wales

Heidelberg Materials UK granted Worley and MHI Group a FEED contract to create a carbon capture facility at the Padeswood cement mill in North Wales.

A system that captures 800,000 tons of CO2 annually would eliminate 320,000 autos. 

Worley’s London, Manchester, Aberdeen, and Glasgow teams and global carbon capture experts will complete the project.

The UK Government has designated Padeswood a Track 1 capture project and a vital part of the HyNet industrial cluster.

Heidelberg Materials can receive UK government clearance, a favourable final investment decision, and EPC in Q1 2025 through the FEED project stage.

Heidelberg Materials UK CEO Simon Willis stated, “This is a decisive next step in our plans to install carbon capture technology at our Padeswood cement works. Once operational, it will deliver net zero building materials for large projects nationwide, helping us decarbonize the construction industry and become a net zero enterprise.

MHI CEO and Head of Engineering Solutions Kenji Terasawa said, “The cement industry is ‘hard to abate’ because CO2 emissions cannot be avoided in production. Heidelberg Materials UK will lead the UK cement industry by using our Advanced KM CDR ProcessTM carbon capture technology to reach net zero carbon by 2050. We’re happy to help with this dedication through Padeswood CCS.”

To Prevent Falls from Height, MPs Advise Building to ‘Embrace Tech’

Original Source: MPs tell construction: ‘embrace tech’ to stop falls from height

A group of MPs wants construction and other businesses to use virtual and augmented reality and wearable technology to avoid falls from height.

At its latest meeting, the All-Party Parliamentary Group (APPG) on Working at Height released a manifesto with four pledges to address this type of accident, the leading cause of workplace fatalities.

It calls for simpler reporting. The APPG reports that “several government agencies and organisations collect elements of accident data with varying effectiveness”.

The height safety charity No Falls Foundation “fully supports” the APPG’s proposal for streamlined reporting and “for data on how and why falls happen to be more easily accessible”.

At the APPG conference, No Falls Foundation charity manager Hannah Williams said: “The No Falls Foundation is conducting the largest research survey of its kind into the underlying causes of a fall from height.

The poll will target all industries and anyone who witnessed, investigated, or experienced a fall from height. They can communicate detailed fall-from-height accident information. It will guide our future research efforts and help us and others allocate resources to avoid height falls.

The manifesto encourages using technology to prevent falls, including:

  • Promoting HSE Science Discovering Safety’s leading indicators to predict danger.
  • Wearable gadget for safety and alarm.
  • Need-based mobile apps for information, competence verification, and micro-learning.
  • VR/AR for realistic training scenarios and improved planning.

Summary of today’s construction news

Overall, we discussed the business activity estimates for the UK construction industry are at their highest point since January 2022, suggesting a surge in optimism, even though order books are smaller. Concurrently, in order to establish a company worth more than £7 billion, the Companies have agreed to an all-share bid. Meanwhile, the biggest UK housebuilder, Barratt, will acquire Redrow for approximately £2.5 billion. Barratt will become the biggest home builder in the UK after the two companies accepted its all-share offer. In addition, the Padeswood cement plant in North Wales was awarded a FEED contract to construct a carbon capture facility by Heidelberg Materials UK to Worley and MHI Group. Eliminating 320,000 vehicles might be possible with a system that gathers 800,000 tons of CO2 each year. The project will be finished by Worley’s teams in Glasgow, Aberdeen, London, and Manchester, as well as by carbon capture professionals from throughout the world. Over and above that, a number of members of parliament have called for the use of VR/AR and wearable tech in the construction industry and other sectors to reduce the risk of falls from great heights. This kind of mishap is the top cause of workplace deaths, and the All-Party Parliamentary Group (APPG) on Working at Height produced a platform with four promises to address it at its most recent meeting.

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