I read an article in the Glass Times magazine today about figures obtained by Emplas which shows just how hard a year 2012 was for our industry. Most specifically the fabrication sector.
The figures which Emplas managed to get hold of showed that at the start of 2012, there were around 1800 fabrication companies in the UK window industry. By the end of the year, that had dwindled to around 1400. That’s a loss of a staggering 400 companies. That is 400 companies who have had to make people redundant and I’m sure many millions of pounds have had to be written off by manufacturers as a result of debts not being able to be paid.
Here’s an interesting tit bit; more than half of those that went to the wall in 2012 were producing less than 60 frames per week. In the world of fabrication, this is very small fry indeed and is a clear signal that the industry is still in a period of streamlining and that there are probably many more small to medium sized fabricators still to go bust before the fabrication sector is back down to the right size in comparison to the overall market.
What the article explains, and something I have long banged the drum about, is the eradication of margins. When a company produces 60 frames per week, there isn’t going to be much of a profit margin there. If prices go up, if fuel costs go up, or if that business loses a few regular orders and is reduced to say 45 or 50 frames per week, that is all their margin gone. There is no room to adapt when your business model only allows for 60 frames per week or more.
Even if their overheads are little to zero, margins are that tight at the moment for everyone right now that any drop off in business, even if it is only short lived, can close the doors of the business for good. That is how fragile the overall economy is right now, and it has to be considered that banks haven’t given SME’s anywhere near enough help or guidance to help them cope through these tough times.
I would say that those businesses close to the edge of going under should be changing their business model and aiming for higher numbers of frames per week and better margins, but given the stage of economic evolution we’re in right now, it’s probably too late for that. 2013 could be another dramatic year. Could we see the UK’s fabrication population drop to 1000 by the end of the year?