Executive Perspective: Building Materials at a Pivotal Moment

The building materials sector is standing at a crossroads. At first glance, the data is sobering: in the first quarter of 2025, UK ready-mixed concrete and asphalt volumes fell by 6% compared with the previous quarter, while the Construction PMI recorded its sharpest contraction since 2020. Yet there are strong signals of future opportunity. Government commitments to housing, infrastructure and the energy transition suggest a pipeline of projects that will reshape demand in the years ahead. 

The critical issue isn’t whether recovery will come, but whether organisations are prepared to capture the benefits when it does. Past cycles make the lesson clear: companies that invest in resilience during downturns emerge with greater strength and secure an outsized share of value once growth resumes. 

Learning From Manufacturing Excellence 

John Deere provides a striking example. During the 2008 recession, while many peers reduced activity, Deere took a different path. The company tightened control of working capital, improved production processes and redesigned capital allocation. What could have been a negative 5% return turned into a 40% return on invested capital, even at the bottom of the cycle. 

Iberdrola made a similar choice during COVID. The Spanish utility accelerated investment at a moment of widespread caution. Since then, profits have doubled and the company’s market value has risen by 50% compared with peers who hesitated. Chief Executive Ignacio Galán expressed it directly: “speeding up investments is the best-I would venture the only-way through crisis and uncertainty.” 

These cases highlight a mindset that distinguishes leaders: the willingness to move forward decisively when conditions appear most uncertain. 

Why Culture (and Regulatory Pressure) Matters  

The experience of UK utilities offers a parallel, and a cautionary, tale. Regulatory analysis has revealed that poor performance is often rooted in organisational culture and leadership, not simply in assets or financing. Ofwat’s Chief Executive has been explicit on this point, citing ‘culture and leadership’ as root causes of underperformance. And the impact is measurable. Severn Trent, which addressed cultural issues directly, has achieved an 8.9% regulatory return compared with the sector’s 4.7% baseline, while also sustaining four-star environmental ratings.  

And the financial stakes are significant: since 2020, regulatory penalties have exceeded £430 million, with annual differences of more than £150 million between the strongest and weakest performers.  

For building materials, the same pressures are present even without formal regulation. Margins, capital costs and investor expectations all hinge on organisational readiness. Boards that take action early will preserve value, while those that delay will see opportunities slip away. 

What Works: Five Proven Approaches 

Across capital-intensive industries, five approaches have consistently delivered resilience and performance: 

1. Simplify the organisation – Reduce layers, clarify accountabilities and remove duplication to speed up decisions. 

2. Standardise operations – Apply consistent practices to cut waste and improve reliability. Lean principles have been shown to raise productivity by 77%, with projects completed faster and at lower cost. 

3. Protect day-one performance – treat new projects like investors do, with clear go or no-go gates. Each month of delay can wipe out millions in value. 

4. Build leadership capacity – With 44% of the construction workforce aged over 45, investment in leadership and digital capability is urgent. 

5. Increase visibility – Use real-time dashboards to surface risks early and to provide boards with confidence in delivery. 

Organisations that implement these measures secure faster project ramp-up, reduce margin leakage and gain greater credibility with investors. 

The Window for Action 

The temptation may be to hold back until conditions improve. Yet the foundations of recovery are already visible. Significant investment is being directed into utilities and infrastructure, and some building materials companies are moving now. 

Forterra’s £140 million capacity investment delivered 82% profit growth. SigmaRoc’s acquisitions during the downturn built both scale and resilience. The cost of waiting is rising: their example demonstrates that those who act early can set the pace for the sector. 

Board Readiness Assessment 

Five questions can help leadership teams test their readiness: 

1. Margin drag – How much is lost each year through duplication and slow decision-making? 

2. Asset readiness – Would a new facility achieve full productivity from the first day, or would complexity delay returns? 

3. Decision speed – When demand returns, will processes enable a faster response than competitors? 

4. Leadership resilience – Do current leaders have the digital and cultural skills to drive transformation? 

5. Investor scrutiny – From an ESG perspective, would the organisation appear resilient or exposed? 

The Leadership Imperative 

What would a 10% improvement in margins mean for your organisation? The next cycle will be shaped not by those who own the largest assets, but by those who demonstrate the greatest agility and foresight.  

Ultimately, it’s periods of downturn that actually reveal the true character of leadership: Those who simplify, invest and move with intent come through stronger. Those who wait are left struggling to regain lost ground.  

So: the choice becomes not whether to act, but whether to lead. And leadership means moving before the market forces you to.  

References and Evidence Base  

Primary Regulatory Sources:  

1. Ofwat (Water Services Regulation Authority)  

• Water Company Performance Report 2023-24, October 2024  

• Direct CEO quote: "It is clear that companies need to change and that has to start with addressing issues of culture and leadership. Too often we hear that weather, third parties or external factors are blamed for shortcomings"  

• Performance penalties: "Performance penalties have totalled more than £430m since 2020. £157.6m is the net sector underperformance penalty companies reported to Ofwat for 2023-24"  

• Investment delivery: "Companies generally underspent their allowed funding for delivering service enhancements. This can result in improvements for customers and the environment being delayed"  

2. Severn Trent Water Performance Data  

• Return on Regulatory Equity: 8.9% vs sector baseline 4.7% (Ofwat AMP7 Performance Reports 2020-2024)  

• Environmental rating: Four-star performance maintained for five consecutive years (Environment Agency Performance Assessment)  

Construction Industry Research:  

3. Dodge Construction Network & AGC Research (2021)  

• Methodology: Collaborative research with Lean Construction Institute analyzing lean construction project outcomes  

• Key findings: "Companies applying Lean principles saw 84% higher quality, 80% greater client satisfaction, and a 77% boost in productivity"  

• Project completion: "Projects utilizing Lean methods are more often completed ahead of schedule and under budget"  

4. McKinsey Global Institute Construction Productivity Research  

• Case study: "The use of integrated planning tools on a large-scale oil and gas project achieved a 70 percent increase in the project's productivity"  

• Industry context: Global construction productivity growth averaged only 1% annually vs 2.8% for total economy  

Workforce Demographics:  

5. Office for National Statistics (ONS)  

• "Migrant labour force within the construction industry" (June 2018)  

• Annual Population Survey data: "44% of residents working in construction were aged 45 years and over between 2014 to 2016"  

• Aging trend: "13% increase in workers aged 45+ in construction industry between 1991 and 2011"  

6. Construction Industry Training Board (CITB)  

• Workforce Skills and Mobility in the Construction Sector 2022  

• Regional demographic analysis and skills gap identification  

Manufacturing Case Studies:  

7. John Deere Financial Performance  

• Bain & Company analysis: "John Deere managed working capital more actively from 2006 on, redesigned its capex strategy to focus on higher-return investments. That increased the company's return on invested capital to 40% during the recession, up from negative 5% previously"  

8. Iberdrola Strategic Investment  

• CEO Ignacio Galán, 2020: "Certainty that speeding up investments… is the best - I would venture to say the only - way to get through this situation of crisis and uncertainty"  

• Performance outcomes: Profits doubled, valuation increased 50% post-COVID investment period  

Market Data Sources:  

9. Mineral Products Association  

• Q1 2025 volume data: Ready-mixed concrete and asphalt volumes fell >6% quarter-on-quarter  

• Planning delays impact assessment (Q1 2025 report)  

10. S&P Global / CIPS  

• UK Construction PMI, March 2025: Sharpest contraction since 2020  

Additional Industry Analysis:  

11. National Audit Office (NAO)  

• "Regulators have failed to deliver a trusted and resilient water sector" (April 2025)  

• Infrastructure investment requirements and delivery challenges  

12. Company Performance References  

• Forterra plc H1 2025 Results: £140m capacity investment, 82% profit uplift  

• SigmaRoc counter-cyclical acquisition strategy analysis  

Methodology Notes:  

• Regulatory data sourced from official government and regulatory body reports  

• Productivity studies based on multi-year industry collaboration with established research institutions  

• Demographic analysis uses official ONS census and survey data with 95% confidence intervals  

• Financial performance data verified through public company filings and third-party analysis