David Thomas says part of the reason housebuilder shut its offsite factory is that planners and consumers are not keen on the uniformity of design that offsite involves. Dave Rogers talks to the Barratt chief exec
The boss of the country鈥檚 biggest housebuilder has warned that offsite construction in housing risks producing rows and rows of identikit homes.
Barratt chief executive David Thomas (pictured, centre) said that one of the reasons it shut down its offsite factory operation, called Advance Housing, back in 2007 after just five years was that planners were looking for more variation in design than the eight design options it had on offer.
He added: 鈥淭hat鈥檚 one of the challenges when you look at developing a full offsite solution and when you look at what鈥檚 considered to be good design principles. Having very uniform streets of housing is not what the planners are looking for.
鈥淲hat a factory wants is for things to be very uniform. Apartments are much more easily adapted to being offsite. Uniform is very, very good for offsite. Apartments, typically, are very uniform.鈥�
鈥淗aving very uniform streets of housing is not what the planners are looking for鈥�
David Thomas
And he said housebuilders have to be aware that offsite homes 鈥� which might appeal to the industry 鈥� might end up turning away some customers.
鈥淚f you talk to anyone who鈥檚 got a production process, production processes are most efficient where you have significant runs of the same item. Whether it鈥檚 a car, a cup or a house.
鈥淪o if you start varying what you鈥檙e trying to do, it becomes much more challenging for production. Uniformity is potentially an issue for the consumer.鈥�
Thomas said he has no plans to revive its Advance Housing concept or follow the example of Persimmon, which has said it wants to produce its own bricks and roof tiles.
Persimmon, the country鈥檚 third-largest housebuilder, has said its brickworks factory in South Yorkshire has the capacity to manufacture 80 million bricks a year and will begin making its own roof tiles at the same site.
David Thomas CV
2007: Becomes finance director and chief executive of retailer Game
2009: Joins Barratt as finance director, launching a 拢720m rights issue
July 2015: Promoted to position of chief executive, taking over from Mark Clare
February 2018: Turns in a record pre-tax half-year profit with the figure jumping 7% to 拢342.7m for the six months to December 2017
But Thomas said: 鈥淲e鈥檙e not tempted to follow the Persimmon route. We鈥檙e not specialists in that area. The supply chain are the experts. Investing 拢50m [in a factory] is not necessarily a huge investment but the difficulty is the return profile, how many years can that factory operate at full production.鈥�
Thomas said another reason for shutting its Advance Housing operation at Daventry in Northamptonshire was that it had been standing idle for too long. 鈥淚n the world of offsite, it was the Full Monty 鈥� [but] we were simply not getting enough production through the factory.鈥�
Barratt expects that by 2020 around 20% of its output 鈥� last year the firm had around 17,500 completions 鈥� will be from modern methods of construction, such as homes using timber frames and light-gauge steel frames.
Thomas said there is ongoing pressure to find bricklayers and added: 鈥淗ouses are very much the domain of the bricklayer, not so much with flats because [they use] cladding.鈥�
And he said the government鈥檚 target of building 300,000 homes a year is within reach for the industry. 鈥淚t鈥檚 definitely achievable. We built more than that in the sixties and had a good go in the seventies.
鈥淏ut we need to have more skills, we鈥檝e got to be employing more people and we鈥檝e got to start using modern methods of construction.鈥�
The firm said it has stopped buying sites in the zone one and two areas of London and is concentrating on zones three to six, where it is building 1,100 units at a former Nestle factory in Hayes and a further 1,500 units close to the railway station in Harrow.
Thomas said the rate of sales in central London has slowed in the past couple of years.
鈥淚n zones one and two, two or three years ago, we were selling two or three a week on many of our sites. That鈥檚 about 1.2 now. It鈥檚 a combination of slowing demand and a lot more supply.鈥�
Help to Buy exit 鈥榤ust not be cliff edge鈥�
Barratt chief David Thomas has said he expects the government鈥檚 Help to Buy scheme to be around for some time yet.
The scheme, to encourage building and assist first-time buyers onto the property ladder, has come in for criticism, with opponents saying it has fuelled the share prices of major housebuilders and led to the sort of eye-watering bonuses paid out to executives at Persimmon.
Liberal Democrat leader Vince Cable told 黑洞社区 that bosses at the housebuilder, which last week came in for fierce criticism from its shareholders at its AGM, were 鈥渂asically pocketing large amounts of money gifted by the taxpayer for executives, which underlined the stupidity of Help to Buy. It does very little good, it has boosted prices, boosted profit margins, boosted bonuses鈥�. But Thomas defended the scheme, saying it had stimulated GDP and built more homes.
The scheme, launched in 2013, has been extended to 2021, which Thomas said gave the industry more certainty. 鈥淎 cliff edge looks like a bad strategy so it鈥檚 much better that if [the government] are going to exit [from Help to Buy] we have some managed programme that allows us to exit in a structured way.
鈥淚f they鈥檙e going to look for a managed withdrawal, they need a reasonably long extension. There鈥檚 no point extending it for 18 months and calling that a managed withdrawal. That鈥檚 just a slightly less steep cliff. I think they鈥檒l approach it sensibly, they know how powerful it鈥檚 been.鈥�
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