Q&A – Peter Sharp
Khai Trung Le talks to Michelmersh’s Peter Sharp on his extensive experience in the ceramics industry, current challenges and how the big four companies have changed the shape of the industry.
Tell me about your background and career to date.
I left school in 1984 and joined a family ceramic business as an apprentice hand clay moulder. The product range at the factory was vast, from industrial ceramics and other whitewares, using porcelain and stoneware, to heavy clay products such as bricks, tiles, pipes and terracotta. This gave me a good appreciation of and foundation in the ceramic industry. Around 1990, I moved into a more technical managing role, studying at Staffordshire University, UK, mainly looking at ceramic glaze and body chemistry and development. In 1995, I became factory manager of the Leicestershire based site I joined in ‘84.
In 2004, I joined Michelmersh Brick Holdings PLC’s Charnwood factory as Works Manager, where in the following year we did an award-winning job at London’s St Pancras railway station, producing over a million bespoke, handmade bricks (see Underneath the Arches – Rebuilding St Pancras Station, Clay Technology, Feb 2007). I became Group Operations Director in 2009, joined the main board in 2011 and I am currently Joint Chief Executive Officer.
What does your work at Michelmersh involve?
I lead the business with joint CEO Frank Hanna and both of us work closely with our Finance Director Steve Morgan to manage all aspects of the business. We have five operational sites across the UK and six highly regarded brands, making over 100 million bricks annually.
Where does demand currently lie in the Michelmersh product line?
We have great demand across all products, spread between residential, commercial, repairs and maintenance sectors. Our premium stock bricks have gone into multiple prestigious projects, such as South London’s Kidbrooke Village development, Artillery Row, the British Library, famous Knightsbridge shops and a selection of high-profile regeneration projects.
Also, following a year of product development to match the existing colours and sizes, we’ve just completed production of 440,000 bespoke wirecut bricks for the Battersea Power Station restoration programme. Demand is always growing, but these are just some of the highlights.
How has production been for the first half of 2017?
We’ve been at capacity, and forward orders are strong, so we fully expect this to continue. The main market fundamentals within the industry remain positive. We produce a premium range of building products for all sorts of projects – across handmade and machine-made stock bricks, clay pavers, roof tiles and architecture terracotta, we’ve got lots of strings to our bow and have recently increased production capacity by 40% with the acquisition of Carlton Brick in South Yorkshire.
You’ve been involved in the brick industry for more than 30 years. Can you tell me how it has evolved in that time?
A couple of things spring to mind. First, the consolidation of ownership. If you look at the UK today, there are four main businesses that cover 95% of the industry, with a few small independents. Whereas back in the late ‘70s to early ‘80s, there were probably around four times as many businesses. That’s the key difference.
The second would be efficiency improvements. Modern kilns and dryers are more energy efficient, but there have also been vast production improvements centred on automation and updating control systems.
Is consolidation the principle change you’ve seen within Michelmersh too?
Michelmersh has contributed to consolidation. Michelmersh Group started in 1997 as the merging of two independent businesses. Since then, the company has acquired several more businesses. We have also considerably improved the efficiency of our operations with new kilns and dryers, robotics and process management systems.
The other recent change is all four of the large businesses are now publicly owned. Whereas years ago they were mainly private businesses.
How viable would it be for a new brickmaker to enter the scene without consolidating with the big four?
The barriers to entry for any sort of heavy clay product manufacturing are extremely high. Generally, you’ve got to have a clay source next to the factory you want to build, which means planning permission – potentially an expensive and lengthy process. You would need at least 25–year clay reserve to justify the capital expenditure on a greenfield site. I would think it highly unlikely that a new clay business would enter the market from a new facility. It’s only the large companies that have built new factories to add to their existing business in recent years.
The skills gap in the construction industry remains a major talking point. What can be done to encourage more young people into the industry?
Internally, we run apprenticeship and graduate programmes across our business and we have a personal development programme for our employees. We also work closely with Brooklands College, sponsoring their bricklaying NVQ programme and donating products to support the course. We run CPD schemes for stakeholders, inviting them to our factories to give them an idea of how things operate.
As well as Brooklands College and South West Leicester College, we contribute to a wide range of educational courses across the UK. We have a popular CPD programme and do our utmost to support our skilled youth for the future generation of designers and bricklayers.
What are the challenges facing the industry right now?
I would say energy security, mainly gas but also electricity, and inflationary pressure of input costs centred around how the pound sterling stands against the euro and US dollar.
The key issue with energy security is the effect on prices. This can spike very high at short notice as the market reacts to certain events like supply outages, political issues or even the weather forecast. We manage this by forward-hedging our requirements, because you find the forward prices 12–18 months ahead aren’t affected so much by short-term volatility. The issue going forward is the UK’s lack of gas storage.
Joint CEO Peter Sharp joined Michelmersh in 2004 as Works Manager of the Charnwood Factory, becoming Group Operations Manager five years later and joined the main board in 2011. He leads the company with Frank Hanna.