Before the bad years, the industry could count on the typical buying pattern. Beginning of the year used to be quiet, spring would bring a steady rise in trade, summer would see a racking up of business, autumn would see a gradual slow down, November would bring a quick sharp boost in the run up to Christmas, then December it would be hardly worth opening the doors.
The past few years unfortunately haven’t provided the window industry with this regular and healthy business pattern – and this year was no exception. From week to week, revenues would fluctuate. Lead levels would look like a roller-coaster if they were plotted on a graph! This creates terrible cash-flow problems for companies, which we all know is the lifeblood of every business. We have seen some companies close their doors because of poor cash-flow, not because the orders weren’t there. Banks are suddenly becoming very quick to call in their money these days!
With growth in the industry not set to return until 2015, it looks like the windows market is set to struggle for some stability in the coming few years.
Deal Or No Deal?
The Green Deal later on in the year certainly caused plenty of debate within the industry. The Green Deal is the Governments flagship policy to get Britain’s homes up to a higher standard of energy efficiency, by providing loans via the private sector to homeowners to have improvement work done to raise the energy efficiency of their property.
The GGF worked hard on behalf of the industry to make sure that energy rated windows was included as part of the deal. At first everyone seemed to welcome the plan. But as we all looked into the finer details that were available, questions were then asked about the viability of the deal. The biggest question being would the plan even work if the banks and biggest energy companies weren’t prepared to stump up the cash for these loans.
My biggest worry was that even if the Green Deal was established, non-PVCu companies such as Tesco and Homebase, who have now launched their own ranges of PVCu home improvement products, would wade in and steal most of the newly generated business that the Green Deal would have created.
The GGF says that it is working hard to make sure all size and manner of company gets a slice of the Green Deal pie. But I still fear that the commercial power and reach of some of the biggest companies will dampen any improvement for the smaller installation companies in our industry.
There are still many questions left to ask and many more answers to come. I do sincerely hope that it does bring an equal opportunity for prosperity across the whole industry, as it desperately needs it. The plan is to be implemented in October 2012, I guess only then will we be able to tell if it is going to have a positive impact on an anemic industry.
Social Media Flexes It’s Muscles
2011 saw for the first time in our industry how big an effect social media sites like Twitter and blogs can have. In June of this year I broke the story of Veka buying out the Bowater Building products group. This was information that some in the industry knew about, but this site was the first to make it publicly known.
The response on here and on Twitter was immense. Various page views and visitor number records were broken. My Twitter account was even spam attacked to force it to temporarily shut down. I had employees from both companies contacting me asking if I had any extra information. It got to the point where I was feeling rather uncomfortable about having to be the one to explain the state of affairs of the company they worked for.
I got the feeling that both Bowater and Veka wanted me to keep my mouth shut, but they both probably knew I wasn’t going to.
This was the first time social media had any sort of impact on the industry and how it behaved in the online world. It forced more manufacturers to talk. But it has also forced the boards of the bigger companies to maybe have a re-think on how they deal with any sensitive information.
Social media now has a permanent place in our industry. Whether you are a business wanting to make more business contacts. Whether you’re an installers wanting to reach out to more potential customers. Or if you’re an industry commentator with a blog of your own and an active Twitter user, social media now has a huge part to play in how our industry is run.
Year Of The Increase
High inflationary costs finally took it’s toll on our industry this year. During the first six months of 2011 there seemed to be a never ending stream of letters from suppliers and manufacturers explaining how they would have to be increasing their prices within a matter of weeks.
The worst culprit for this seemed to be the glass manufacturers – most notably Pilkington. I think many of us will have received a letter from them explaining that pretty much all ranges of their insulating and tinted glass would be going up between 10% and a staggering 40% or more!
The recession years of 2008/2009 and early 2010 finally translated into price rises in 2011. These were highly inconvenient as most companies were adjusting to what was a slow start to the trading year thanks to some of the worst winter weather in 30 years, and what was generally going to be one of the worst years for the industry in quite a long time.
The dilemma left for businesses was huge. Do they raise costs to cover the increases from their suppliers, meaning what was left of their profit margins was left in tact, but risk losing business as a result? Or did they absorb yet more increases, eating up what was left of a very thin profit margin already? From what I could tell and have heard over the last 12 months, it was probably a 50/50 split.
So how does 2012 look? Most of you will probably agree that next year is going to be tough. I would go one step further and say that 2012 is probably one of the toughest years many of us will ever experience. No economic forecasts show any prospect of growth, which will also hit consumer spending at the same time. Prices are set to rise throughout next year as the price of raw materials remain high and inflation adds further pressure to the cost of materials.
January is the hardest time for our industry. Trade is still very slow, the poor weather puts another dampener on things, and tax has to be paid in January. This is the make-or-break time of year for companies. If a business is going to go to the wall, it’s more than likely that it’s this time of year when it’s going to happen. The industry could see a lot of businesses pushed over the edge into liquidation. I know I seem to say this every year, but the economic conditions seem hostile enough for this to happen.
Despite what is going to be a very a tough year, I still believe that companies can make the most of what business is left to get out there. Companies have to be at their most fluid and adaptable if they are to steal as much market share as possible.
It can be done. We did it during 2008/2009 and we can do it again now. I think it will be tougher, but I think we are one of the most adaptable and durable industries the UK has to offer. We’ll all just have to take it week by week and keep analyzing how we do our business.
I want to thank all of you for your support this year. This has been the best year for my blog so far, and for that I am greatly appreciative! A huge thank you to all my readers, regular or occasional. And a big thanks to all those who left a comment and joined in the conversation. I hope to see you all next year!
Have a very merry and relaxing Christmas and a fantastic New Year!