Wienerberger Baustoffindustrie Ag
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CASE SUMMARY
Company Overview
Founded in 1819 in Vienna and traded since 1869 on the Vienna Stock Exchange, Wienerberger can look back on a great tradition. Only in 1986 the company started its dynamic expansion, which has focused on building materials since the introduction of Value Management in 1997. This transformed Wienerberger from a local Austrian brick-maker into the worldâs largest producer of bricks within a few years.
Wienerberger encompasses 3 divisions, namely bricks, pipes, and real estate. It operates more than 70 companies and has about 220 plants in some 25 countries. Products include wall systems (hollow and facing brick), concrete surface paving bricks, and roofing systems (clay and concrete tiles). Other Wienerberger operations include its Pipelife plastic pipe business. The companys extensive real estate portfolio (which it is divesting) includes development, landfill, and garage investments.
Wienerberger is the worlds largest producer of bricks (as of March 2001) and Number 2 on the roofing market in Europe, and also holds leading positions with pavers in Europe.
Hallow bricks
No. 1 worldwide
Facing bricks
No. 1 in Continental EuropeNo. 2 in the USA
Roofing systems
No. 2 in Central-Eastern Europe
Clay pipe
No.1 in Europe
Plastic pipe
No. 4 in Europe
Market Analysis
Home Country (Austria)
Austria is a highly developed country, located in the centre of Europe.
Positive
The opening of Eastern Europe created the opportunity for relocation of the production units to take advantage of very low cost and the development of new markets, bur resulted in new competition in some sectors.
Became an EU members in 1995, resulted the country be a favorable location for foreign firms and attractive markets.
A tough currency policy
Privatize the large state-owned sector, which resulted in further structural markets distortions
Negative
High unemployment rate
Reducing public investment
Industry
Sales in brick industry depend on
The general level of economic activity
The business of construction and construction-materials industries
The development of private residential construction
Home Market
Home market is very small
Market potential in home market relates only to the adoption/renovation and modernization sectors, rather than new (private or public) building.
Private sector elasticity demand is much lower than in the public sector.
Major EU markets and EU Leading Supplier
Generally, the building industry in the EU has been a stable sector for many decades
Western Europe ? the real growth rate is expected to remain below 2%
Eastern Europe
Building industry has increased its volume
Very low and unstable growth due to varies considerably between the countries
âsuper-normalâ growth of market shares explained by rapid demand growth and acquisitions
Labor productivity increased by 33%, while unit labor cost (+15.8%) and total cost (+17.4%) rose considerably less
Trade and Nature of competition
Trade in the brick industry has been minimal as it mainly a local business
Market structure in the brick industry is OLIGOPOLY, in which tends to reduce competition between few suppliers, became dominant position of large supplier in home market
Competition depend on the share of bricks of total construction materials used, including substitutes such as concrete
Highly