Wow. 2016 has been one hell of a year, and a year many might be happy to see the back of. Brexit, Donald Trump, Middle East Crisis, procession of deaths of our country’s best loved personalities. It seems as though there’s not been all that much to be happy about.
On the UK glazing industry front though, it’s actually been a pretty good year for most. A year of growth across much of the sector. Installers reporting a profitable 2016 with prospects for 2017 looking good too. Brexit didn’t manage to sink the positive consumer spending spirit. The wider UK economy was stronger than most gave it credit for. Despite the whirlwind of political upheaval and shocks, UK fenestration has stood strong and returned a good year.
But 2016 is disappearing quickly in the rear view, and we now must turn our attentions to 2017. What are the prospects for this next 12 months? Spoiler alert, there is a poll!
An uncertain year
Given the lay of the land at the moment, I think there is very little we can be certain about. However, the one thing we can all be certain about is that there is big uncertainty on the horizon.
There are a number of factors at play which could send the fortunes of the UK glazing sector in one direction or another. The main one is of course Brexit. In the New Year, PM May has said she will lay out more details of the plan when it comes to EU negotiations. She has once again reiterated that Article 50 will be triggered by the end of March. That looks set in stone at this point, no matter what happens, even if the Supreme Court upholds the High Court decision whereby Parliament must trigger Article 50.
As we know, the doomsday predictions about Brexit that were prophecised before the referendum have not materialised. Although GDP and economic predictions have been watered down for 2017 and 2018, I maintain that these are on the low side. We see time after time predictions that turn out to be wrong and the UK economy outperform GDP predictions nearly every quarter. I see this as a distinct possibility throughout the next 12 months. I don’t think we give our own economy enough credit sometimes.
Sterling needs to remain steady
One area that will help UK glazing is a steady Sterling. At the moment, after the vote and the October flash crash, Sterling vs Pound has bounced around between the $1.20 – $1.30 range. Although volatile when you consider the long term view, in the short term this is fairly steady. A range like this needs to be maintained during 2017 to ensure that the prices rises we have seen during the second half of this year are not repeated.
Installers would like to see their prices maintained, so that they don’t have to pass them down to the home owner. Any increases in price to the consumer risks hesitation and caution, which isn’t good for the glazing industry, or general spending on all sorts of items.
However, with mortgage rates as low as they have ever been, average wage earnings on a slow and steady rise, there is still some flexible spending to be done by home owners. There is a renewed energy from home owners to renovate their homes rather than move, which is a positive note for installers. And the mortgage market isn’t really booming, which again keeps people in their current homes and encourages them to improve rather than move.
And some clarity should be maintained. This is nothing like the Great Recession of 08/09. We’re miles away from that. With GDP growth predicted at 1.1% next year and 1.4% in 2018, although slow, is still growth.
For me, there remains plenty of new opportunities for our industry’s installers next year. More and more are diversifying and selling products to home owners that they have never sold before, in a bid to find new revenue streams. I have found that those who do, find success. It is something we have pushed at our place during 2016 and we have seen a 15% increase in our sales in 2016 compared to last year.
Poll
So what does the industry think? Will 2017 prove to be an even trickier year than this one? Could it be worse? Or could it be better? I maintain that there is still going to be plenty of new business to be won in 2017, if we’re smart enough to navigate the bumps in the road and work hard to find the lucrative opportunities.
Below I have created a poll to try and gauge how we feel about the coming 12 months. Before you leave to pounce on the mince pies and mulled wine, take a second to vote and leave your thoughts on what we can expect next year. It will be my featured post into the New Year, and if it gets enough votes, I’ll do a results post where I’ll try and analyse what the results try and show us.
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Good article – I think inflation also requires some attention as a major macro-economic force. Inflation was around 1% in 2016, with the latest forecasts predicting 2.7-3.0%, almost a tripling. This is going to have a significant impact on spending power by consumers which will have a knock-on effect on the points you make around confidence/hesitation to pursue RMI activities.
Hi Obsever I read a report from UBS today that they expect to see a strengthening in Sterling during 2017, perhaps nudging above the $1.30 level, which would be nice. I am also currently reading a piece from the Guardian about leaked minutes from a meeting where the EU’s chief Brexit negotiator apparently wants a special arrangement where the other 27 member states can have easy access to London and it’s financial facilities. If this carries any weight over the weekend Sterling could see a bit of a bump up if there is any substance to this. My point being,… Read more »