Persimmon is making its own timber frames, tiles and bricks ©  Peter Cade/Getty Images
Persimmon is making its own timber frames, tiles and bricks © Peter Cade/Getty Images

How Persimmon tackled shortages with vertical integration

19 August 2021

Housebuilder Persimmon has mitigated supply chain shortages with vertical integration to raise profits by 64%. 

The UK’s biggest housebuilder said it was producing its own bricks, timber frames and tiles and “vertical integration and strong cost management have helped maintain industry-leading margins”.

The company said pre-tax profit for the first half of 2021 increased to £480m, up from £292m on the same period last year.

Chief executive Dean Finch said: “We have invested in expanding our off-site manufacturing hub at Harworth, near Doncaster, to strengthen security of supply. 

“Our brick plant and roof tile manufacturing facility provide a significant proportion of these materials to our sites. This complements our existing off-site manufacturing capability at Space4, which produces timber frames, highly insulated wall panels and roof cassettes as a modern method of constructing new homes.”

He added: “The vertical integration afforded by use of our own Brickworks, Space4 and Tileworks production will mitigate the availability and cost risks further.”

The company reported forward sales of £2.23bn, which the company said showed demand would remain strong.

Meanwhile shortages of commodities and HGV drivers have continued to disrupt supply chains across industries. 

Cleaning products manufacturer McBride said “exceptional” price rises for raw materials and lorry driver shortages would push 2022 profits down by as much as 65%.

The company said: “Although only seven weeks into the new financial year, the previously highlighted raw material environment remains extremely challenging both in terms of exceptional price increases and supply availability.” 

The company said it had faced distribution challenges within the UK and Germany due to the driver shortage, which has “which has impacted upon both transport availability and cost”.

Landscape products group Marshalls echoed similar concerns, saying "raw material costs across the construction sector and reduced numbers of HGV drivers within the third party haulage market are causing costs to increase which we are recovering successfully through price increases".

According to the Road Haulage Association, the UK is currently facing a shortfall of 100,000 HGV drivers due to factors including driving tests delayed by Covid and foreign worker numbers reduced by Brexit. 

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