It’s an idea that is being whispered a little more loudly these days. Fabricators thinking about getting into the installation part of the market. In a way, it’s already happening via something called vertical integration. I wrote about that subject the other day and if you click here you can read my own thoughts on that.
The idea of fabricators entering the installation market is one that most installers would most likely be very uncomfortable with. However, over the past few months I have heard one or two business leaders in our industry start talking about it more and more. It’s an idea that is gaining traction, and may already be happening.
Finding a way to grow
There are some fabricators that have an installation business already. The nationals do that, but that’s not new. I gave an example in my vertical integration post of a company called HWL Trade Frames. They’re a fabrication business, but have also bought installers in recent years and integrated them to the rest of their business and now have a proper installation arm to the group.
But there could be a growing trend in the coming years where established fabricators, who have had no previous dealings with the installations side of our world, either going down the vertical integration model, or starting their own installation teams and companies from scratch. Something that will irk many an installer.
The trouble is, for fabricators, at least those of the PVCu kind, the avenues in which to remain profitable are closing. The number of PVCu fabricators are falling year on year. The number of dual-materials fabricators is on the rise, and it is well known that the number of timber and aluminium fabricators is on a strong rise. The pressure is on in the PVCu fabrication sector in a big way. So PVCu fabricators will be tempted into looking outside their own environment in a bid to find new revenue streams.
Problem is, those streams are inhabited by installers.
A future challenge to installers?
As you can imagine, if an installer gets wind of their fabricator considering setting up their own installations business or businesses, then they’re going to get rather twitchy.
But from the conversations I have been party to, there is a growing possibility that fabricators might already be actively considering expanding into the installation business. Again, this is not new, these would be long time fabricators who have never dipped a toe into the installer part of the market. As I mentioned above, certain fabricators may be looking at new avenues to help stem the flow of business and keep things profitable.
The problem is, installers are going to feel like the rug has been pulled out from beneath them if this ever did happen. For many installers, they’re already having to fight local battles, where their competition is already selling the same products. Modern day USPs are becoming hard to find. If their fabricator suddenly starts snapping up installers to integrate into their own business, or they start creating their own installation service, then all that does is to give installers even more competition and less of a chance of winning business.
Further, support from the fabricator to installer would falter as the fabricator funnels some of that focus and support to their own new installation business.
If just a single medium to large sized fabricator went down this avenue, they risk a catastrophic alienation of their whole client base. They risk installers looking elsewhere for a new fabricator so they avoid a rise in competition. Their short term cash flows might suffer. I can’t see any advantages for a fabricator to do this.
In reality, I suspect that the current model of the industry will stay as it is. But I do also suspect that one or two fabricators may chance their arm and go into installation as well, even if in a small way. Seeing if they can balance being a fabricator and installer, without cheesing off their installer client base and making them go elsewhere. It would be a difficult task, and one which would probably end in failure.
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