REDLAND PLC
Address:
Redland House
Reigate,
Surrey
RH2 OSJ
United Kingdom
Telephone: (0737) 242488
Fax: (0737) 221938
Statistics:
Public Company
Incorporated: 1914 as the Burlesdon Brick Company
Employees: 18,025
Sales: £1.55 billion (US$2.50 billion)
Stock Index: London New York
Company History:
Redland is a building-materials company whose principal activities are concrete roof tiles, aggregates, stone quarrying, road surfacing materials, concrete products, and clay bricks. Concrete roof tiles, upon which Redland built its business, accounted in 1989 for 42% of its profits; Redland is the world's largest manufacturer of concrete roof tiles. Redland is the fourth-largest aggregates producer in the United Kingdom, and took 37% of its profit from these materials. Bricks made up another 12% of the profits. While Redland has made forays into related areas, including road-marking, concrete pipes, fuel distribution, waste disposal, and most recently plasterboard, the most concentrated growth has been in these three main areas. As chairman Colin Corness explained in 1979, two years after his appointment to chairmanship, "I don't think we want to have an indefinite number of new products, because I'm a great believer in restricting one's product areas, not trying to go into everything simultaneously. One wants to be the best of one's kind in a limited range." Redland is one of four leading building-materials companies in the United Kingdom, along with Tarmac, Ready-Mix Concrete (RMC), and British Plasterboard (BPB).
Redland's success lies in part in its activity outside of both the housing industry and the United Kingdom. The aggregate market, for instance, remains a steady source of income, underpinned by government-funded road-improvement programs. Moreover, the vagaries of the U.K. housing market, so vulnerable to inflation and high interest rates, do not have such a devastating effect on Redland, since over 60% of its profits come from outside of the United Kingdom.
Redland originated as Redhill Tile Company, a small company in Reigate, Surrey, where Redland's headquarters is still located. Redhill manufactured its first concrete roof tile in November 1919 and was registered as a company in January 1920. Although concrete tiles had been introduced to England from Germany around 1895, at the time of Redhill's inception a firm market for concrete roof tiles had not yet developed; slate or clay tiles were traditionally used. However, slate quarries had been going into decline around the time of World War I, and after the war the depleted work force made it difficult for the quarries to keep up with demand for roofing material. Moreover, in 1926 the General Strike kept coal from reaching clay-tile makers so that the tiles could not be cured. The strike also cut off any clay-tile supply from outside the United Kingdom, and concrete tiles broke into the market.
With the gradual acceptance in the 1930s of concrete tiles as viable roofing material, Redhill established new works outside of Surrey, in Leicestershire, Yorkshire, and Northern Ireland. However, with the outbreak of World War II the plants were either shut down or, in the case of the Surrey plant, converted by the government to manufacture munitions. After the war Redhill purchased the government machinery to make the Surrey plant the focus of the company's engineering works. In 1946 Redhill acquired two other tile companies and changed its name to Redland Tiles.
Redland began expanding overseas in 1949, when it acquired a holding in Vereeniging Tiles, a concrete-roof-tile company in South Africa. It also bought a roof-tile factory in Australia in the same year, but was forced to sell it in 1956 when the venture proved difficult to manage so far away from the home base. Redland's first significant overseas expansion, and one that continues to prosper, was its acquistion in 1954 of a majority shareholding in Braas, a concrete tile factory in Heusenstamm, West Germany. Braas had gone on to claim a major share of the tile market in West Germany, as well as to provide a stepping stone for Redland into Western European countries and eventually Eastern Europe, including East Germany, Hungary, and the Soviet Union.
Meanwhile Redland began a program of diversification, merging with or acquiring companies in activities other than tiles in the United Kingdom. In 1955 it amalgamated with Burlesdon Brick Company, formed Redland Holdings, and offered its shares to the public for the first time. In 1962 it extended its new share of the brick market by buying a controlling interest in Eastwoods, the brick manufacturers, for £6.95 million. Between 1955 and 1961 Redland bought up several concrete and stoneware pipe companies, leading to the formation of Redland Pipes. This company developed a number of innovative products, including pipes made of both concrete and glass-reinforced plastic--a combination that makes them both strong and lightweight, and that provides corrosion resistance--but Redland abandoned the manufacture of concrete pipes in 1982 and of glass-reinforced plastic pipes in 1985, because these activities were not sufficiently profitable due to overcapacity in pipe production in the United Kingdom. In 1959 Redland branched into aggregates, taking over Mountsorrel Granite Company in Leicestershire, whose quarries produced granite, and stone for road building. When, in 1966, Redland bought Inns and Company--producer of stone, sand, gravel, asphalt, and ready-mixed concrete--and consolidated its aggregates companies to form Redland Aggregates, it became one of the largest suppliers of sand and gravel in the United Kingdom. In a related field it bought two road-marking materials and equipment companies, Universal Highways in the United Kingdom in 1968 and Prismo Safety Corporation in the United States in 1969, its first toehold in the United States, and formed Prismo Universal. Prismo Universal developed a sprayplastic system of road marking, and a spraygrip process for the safety surfacing of roads but was sold by Redland to a subsidiary of Shell in 1985.
In 1969, Redland made a major move into Australia when it bought a holding in Concrete Industries (Monier) Ltd. Monier's interests were similar to Redland's, covering a broad range of concrete products including precast and pre-stressed concrete products, as well as tiles and pipes. In July 1987 Monier Roof Tile, in response to a threatened takeover by Equity Corporation Tasman, became briefly a majority-owned subsidiary of Redland, and in December 1987 Redland accepted the Equity Corporation Tasman offer for its shares but purchased Monier's concrete roof tile businesses for A$298 million. This base allowed Redland, in 1974, to begin developing interests in the Far East. It developed majority holdings in concrete-roof-tile companies in Indonesia and Japan, and a minority interest in companies in Malaysia, Singapore, and Thailand.
At the same time Redland set up ready-mix concrete, road surfacing, and industrial cleaning operations in the Middle East. Its first entry into industrial cleaning took place in 1971, when Redland bought Purle Brothers, a U.K. waste treatment and disposal company with industrial cleaning interests. The subsequent history of the company, renamed Redland Purle, was not a happy one; in 1981, Corness admitted that "our venture into waste disposal. . . was prone to mishap and uncertainty and tended, however unfairly, to detract from Redland's enviable reputation." After a controversial incident in 1975, when a lorry driver dumping toxic waste at Pitsea, Esssex, dumped his load out of sequence and was asphyxiated by the resulting poisionous gas when his load combined with a previously dumped load, Redland Purle was taken to court by Essex Council for engaging in activities hazardous to the environment. Redland sold the subsidiary in 1980.
The problems with Redland Purle had more to do with image than with finance, and did not affect Redland's overall financial performance in the 1970s. Indeed, Redland's growing interests outside the United Kingdom cushioned it from domestic problems such as the recession and the three-day working week in the winter of 1973-1974. Along with its newly established overseas markets in the Middle East and Far East, Redland was guaranteed steady growth in Europe, where Redland's business was reorganized in 1972, from both Braas, which kept an eye on Redland's interests in Italy, Switzerland, and Austria, and Redland-Braas-Bredero Europa, a Dutch company responsible for business in the Benelux countries and, at that time, Spain, France, and Scandinavia as well.
Redland began the 1980s with an investigation by the Monopolies and Mergers Commission into the almost four-fifths control of the U.K. concrete-roof-tile market by Redland and Marley Tile. The commission concluded that the two companies should be monitored and must inform the Director-General of Fair Trading if either planned to buy other U.K. concrete-roofing companies. This attention from the Commission may have affected Redland's acquisition strategy in the United Kingdom for some time. For instance, in 1983 it withdrew a £35 million takeover bid for the brickmakers Ib-stock Johnsen because of concern that the Commission might not give approval. It did, however, acquire Cawoods Holdings in 1982 and entered a new field--fuel distribution. Cawoods handled primarily coal and oil, with a sideline in aggregates. It was affected by the 1984 miners' strike, suffering a loss of over £1 million. Cawoods's fuel distribution operation were subsumed by British Fuels, a company formed in 1987 with Redland as the majority holder, but Redland sold out entirely in 1988.
Instead of expansion in the United Kingdom, Redland concentrated on large-scale growth in the United States. In 1978 it bought Automated Building Components (ABC) in Miami for US$27 million. ABC manufactured prefabricated timber roof trusses using Gang Nail connector plates--hence the change of name to Gang-Nail Systems. At the same time Redland bought the custom-built storm windows and double-glazing company Season-all Industries for about US$30 million. This venture was unsuccessful and Redland sold it at a loss for US$15.5 million in 1985.
Then, in 1982, Redland increased its U.S. presence when it bought a major interest in limestone quarries in San Antonio, Texas. This Texas quarry group, Boston Industries Corporation, became Redland Worth at the price of US$70.4 million and is now named Redland Stone Products. Other U.S. acquisitions have included two aggregates companies in 1986: Genstar Stone Products in Hunt Valley, Maryland, for US$317.5 million, and MPM in Colorado for US$35 million, partly funded by a one-for-four rights issue. The latter was a joint venture with the U.S. construction materials company Koppers. In June 1988 Redland bought out Koppers's share of Western-Mobile--the company's new name. With this move, Redland became one of the five largest aggregates producers in the United States.
Redland's increased activity in the United States was reflected in the rapid redistribution of its profits. For instance, in the financial year of 1982-1983 the U.K. market accounted for 58% of Redland's operating profits, with virtually none coming from the United States; by 1986-1987, however, the U.S. presence accounted for a full 30% of operating profits, with the U.K market down to 40%. Admittedly this distribution has leveled off more recently; in 1989 operating profit was distributed as follows: United Kingdom 42%, Continental Europe 31%, United States 18%, and Australasia and the Far East 9%.
In 1988 Redland formed a joint venture with the Australian company CSR. The venture acquired PGH Bricks and Pipes, the leading brickmakers in Australia, for which Redland paid A$280 million for a 49% interest. The joint venture also includes the former Monier concrete roof tile businesses in Australia and New Zealand.
In the late 1980s Redland launched a persistent campaign to establish itself in the plasterboard market. Plasterboard is used for building, and is ideal for interior walls, being lightweight and a good form of insulation. Plasterboard sales were estabished at £200 million a year in the United Kingdom, and in the previous ten years the market expanded by about 10% a year. Amid scepticism from the financial world Redland and CSR spent £100 million in a joint venture to break into this growing and potentially lucrative industry, which until now has been dominated by BPB. In September 1989 a new plasterboard factory near Bristol began operating. Since then a three-way price war has been waged between Redland Plasterboard, BPB, and Knauf, a German plasterboard manufacturer also trying to muscle in on the market. In 1990 CSR left the joint venture and Lafarge took an 80% shareholding, leaving Redland with a 20% interest in an enlarged business which includes Lafarge's major plasterboard business in France.
Having established a major presence in the concrete-roof-tile market in Germany, Australia, and the United States--the market in the latter is particularly strong as the construction industry is looking for non-flammable alternatives to timber shingles in areas like California and Florida where fire risk is high--Redland is now making the most of political developments in its search for a new market. Following the thawing of the Cold War, the destruction of the Berlin Wall, and the democratization of Poland, Redland--with the help of Braas--has set up a deal to upgrade existing and build new roof-tile factories in the Soviet Union, Hungary, and Poland. Although Redland has only a 40% interest in these ventures, there is great growth potential given the poor condition of buildings in these countries.
Redland has a reputation for being a safe company, with slow but steady growth and few financial setbacks. The combination of careful expansion into a few related activities and the establishment of strong markets overseas so that it is not dependent on the performance of any one economy has proved a successful strategy. Redland's unexpected move into plasterboard and into the new Eastern European market adds a surprising but welcome spice to its softly softly approach to the building-materials business.
Principal Subsidiaries: Redland Aggregates Limited; Redland Bricks Limited; Redland Engineering Limited; Redland of Northern Ireland Limited; Redland Plasterboard Limited (20%); Redland Properties Limited; Redland Readymix Limited; Redland Roof Tiles Limited; Redland Technology Limited; Ready Mixed Concrete (Eastern Countries) Limited (50%); Bramac Dachstein Ges.mbH (Austria, 24.4%); RBB NV (Belgium, 50%); B & C Danmark A/S (Denmark, 16.9%); Redland Granulats GIE (France); Lafarge Europlâtre SA (France, 20%); Coverland SA (France, 42.7%); VÁÉV-BramacKft (Hungary, 12.7%); Braas Italia S.p.A. (Italy, 50.8%); Zanda A/S (Norway, 49%); Lusoceram-Empreendimentos Cerâmicos SA (Portugal, 47%); Redland Ibérica SA (Spain, 47%); Industrias Transformadoras del Cemento Eternit SA (Spain, 47%); Öbrebro Kartongbruk AB (Sweden, 20%); Braas & Co. GmbH (Germany, 50.8%); Genstar Stone Products Company (U.S.A.); Monier Roof Tile Inc. (U.S.A.); Redland Stone Products (U.S.A.); Western-Mobile Inc. (U.S.A.); Monier PGH Limited (Australia, 49%); P.T. Monier Indonesia (60%); Nippon Monier KK (Japan, 60%); C.I. Holdings Berhad (Malaysia, 29.3%); Delmon Ready Mixed Concrete and Products Co. WLL (Bahrain, 49%); Kuwaiti British Readymix Company (Kuwait, 40%); Readymix Maroc SA (Morocco, 49%); Readymix Muscat LLC and Premix LLC (Oman, 40%); Readymix Qatar Limited (Qatar, 49%); Readymix Gulf Limited (United Arab Emirates, 40%); CPCA-Monier (Thailand, 20%); Zanda AB (Sweden, 49%); Teewen BV (Netherlands); RBB Dakpannen BV (Netherlands).
Further Reading:
"Redland PLC. A Survey of the Company and Its Activities from 1919-1969," Redland Record, Number 26 [1969].
Roberts, John, "Colin Corness is the man 'with too much power'," Financial Weekly, September 21, 1979.
Lynn, Matthew, "Plasterboard Set-to," Business, March 1990.
Source: International Directory of Company Histories, Vol. 3. St. James Press, 1991.
