What Are The Risks From The Glazing Industry’s Mergers Run?

With each merger, with each acquisition, with each buyout, our industry gets a little bit smaller. We’re going through a period of much predicted consolidation. A period where our industry is downsizing itself to a more appropriate size according to current demand.

I personally don’t think we’re anywhere near done. There are a number of groups and super-groups forming which stand in a very powerful position, with the ability to buy and takeover almost anyone they wish. Whilst these deals are good for the companies being bought, and the companies who are doing the purchasing, as more deals start to rack up, the question of the advantages of these deals to the entire industry becomes a louder one.

So as more consolidation is almost certainly bound to happen this year, is it yet time to ask ourselves, what is going to happen to the competitiveness and fairness of the sector.

Competition

There is no getting away from the fact that as our industry’s groups and super-groups continue to buy up their competition and allied businesses, the less competition within the market there becomes. When you take options off the table, the less options for the people to choose from there are.

Now quite rightly, it is the right of companies to buy other companies. That is the free market we operate in and enjoy the benefits from. However, you can’t ignore that as an industry begins to consolidate from within, the amount of choice for installers and home owners becomes reduced.

What that also removes is direct competition between companies, especially that of fabricators and systems companies. When it comes to innovation, evolution of our products, diversity and progress, the less competition, the less these things will progress.

What this merger spree also does is hand more and more control to more of the industry into fewer and fewer hands. The more left-leaning portions of our industry may find this increasingly difficult to swallow.

When it comes to general industry influence, it’s simple, the bigger the company or group of companies, the bigger the influence. There is then the question of whether that influence is used to a positive outcome for the industry, or more selfishly for the company. Perhaps a question we ponder more over as extra regulation and consolidation become the norm.

Monopoly

I suspect a fear for some is if consolidation continues at such a pace that we are left with with just a handful of companies taking up a vast share of particular niches in our industry by way of acquisition.

The glass industry is a good example. When it comes to glass in the UK, there is Pilkington, Saint-Gobain and Guardian. Global companies but all with major market presence in the UK. When it comes to commercial and residential glass, there really are no other names. They control that part of the market. And prices, much like petrol and utilities, go up all at the same.

And herein lies one of my main worries. As groups become super-groups, and super-groups become bigger than that, they can dictate, or at least have major influence over things like supply, price, product choice and other important factors. These things trickle down to fabricators, installers and then eventually home owners.

In window and door world, we’re perhaps not there yet, but we’re getting mighty close. There are some very large groups forming, making purchases that puts them in a very strong position at the head of their respective niches. This is however the system we operate in. A capitalist system that allows companies to buy other companies. A system that I support. But one where I hope those who have the influence exercise it for the good of all. A nice thought.

The buyouts, mergers and acquisitions will continue in our industry for a few years to come. The credit markets are as accessible as they have ever been and will continue to be. The groups and super-groups still have the cash to spend to buy their competition and allied businesses. There are still too many businesses in certain parts of our industry to deal with demand. We’ll see groups get bigger.

Add to the mix the political landscape here and around the world, it’s perhaps the most interesting time our industry has had for a long time.

To get weekly updates from DGB sent to your inbox, enter your email address in the space below to subscribe: