Egdon resources.... new to AIM

Interesting read, RNS from Hanson Building Products,

INTERVIEW Hanson to suspend production at four UK brick-making plants

LONDON (AFX) - Hanson PLC is set to suspend production at four of its major
brick manufacturing plants throughout January next year in direct response to
the rising cost of gas and and lower demand for its brick and clay-based
building products.
The company, which this morning issued a trading statement for the year to
Dec 2005, said brick volumes had declined by 10 pct in 2005 and that together
with the increase in energy costs -- gas is used to fire the brick furnaces --
it would be laying-off around 100 workers during January, although they will
still be paid.
"The UK brickmaking industry is going through a very tough time at the
moment, especially during the last quarter of 2005," Hanson's communications
officer Nick Swift told AFX News in a telephone interview this morning.
"We're paying around 50 pct more for our gas than this time last year and
there is no sign of prices coming down. Although we're hedged forward on some
gas contracts it's likely that there will be another significant rise in our
cost base next year," he added. Hanson's operates the London Brick, Butterley
and Desimpel brick manufacturing operations in the UK.
Hanson's comments echoed those of Baggeridge Brick PLC and Michelmersh Bric
Holdings PLC. Last week, they both warned that high gas prices were putting
profits under pressure and that they would have to implement extended shut-down
at some plants over the Christmas and New Year period and into January.
The high cost of gas is being partially driven by cutbacks in North Sea
production and the lack of gas storage capacity in Britain. The supply of gas
from the continent through the so-called interconnector has also been
insufficient to meet demand with the pipeline only working at around a third of
its capacity. Some European countries have also been accused of hoarding
supplies in readiness for the winter.
UK industries are now paying more than double for their gas than their
European counterparts -- spot prices for gas on the UK market are around 1.00
stg a therm -- and today Hanson warned that unless there was a correction it
could have dire consequences for UK industry.
"We're concerned that if this imbalance continues it will have a severe
impact on not only the UK brickmaking business, but also on many other
manufacturing industries. The high costs of energy are putting companies' costs
under pressure and putting them at a disadvantage compared to their European
counterparts and making UK industry more competitive," said Hanson's Swift.
To try and mitigate the rising costs, Hanson today said it would look to
suspend production at four UK plants throughout January and implement another 7
pct price rise for its brick products from next year.
"This is the most cost effective way to deal with the situation," said
Swift. "We've kept our customers well informed and while no-one likes price
increases they are necessary. We're confident we'll be able to pass them on,"he
continued.
However, the group warned that in the near-term a slowdown in residential
housebuilding and weakness in the RMI market -- repairs, maintenance and
improvement -- and ongoing energy cost increases may impact the group's results
for the first half of 2006.
In the stock market, Hanson's shares fell 10 pence to 613 at 9.00 am. "We
are concerned that bricks will hold back the group's performance going forward,
while energy costs may impact in the short-term," said stockbrokers Seymour
Pierce this morning.