We are starting to understand the level of damage that the COVID-19 pandemic and lockdown has done to our sector. A report issued by AMA Research has said that the crisis will cause a 22% drop in the value of UK fenestration sector this year. Make no mistake, that’s huge, and will cause some significant problems for certain portions of our market.
However, the medium to long term looked better. So here is the report in full:
Revised forecasts from AMA Research suggest Covid-19 and lockdown will deliver a 22% drop in the value of the UK window and door market this year.
AMA, however, said that although this would lead to short-term challenge and some consolidation, prospects for the medium and longer term were positive, with the worst now behind it and moderate but sustained growth forecast through to 2024.
The authors of the revised edition of the Door and Window Fabricators Market Report UK2020-2024 write: ‘As with many other construction products manufacturers and suppliers, the restrictions imposed in an attempt to contain the spread of the virus have led to major disruptions to many businesses.’
They add, however, that with recovery forecast from Q4 this year, ‘growth is forecast in all sectors with a gradual build up over the subsequent 4-year period to 2024 when some sectors will have fully recovered.’
While AMA forecasts a ‘V’ shaped recovery, it however, warns that many of the underlying issues which impacted the industry pre-lockdown, remain. This includes significant over-capacity, particularly in PVC-u extrusion and fabrication.
It also adds that recovery will be faster in some areas of the industry than others, with significantly differing fortunes for residential, housebuilding and commercial sectors.
Jane Tarver, Senior Research Analyst AMA Research said: “There is a lot that still hangs in the balance. A second wave or localized lockdowns still have the potential to exert a major impact on the industry’s fortunes.
“With April and May now behind us and the relaxation of lockdown controls in the middle of this month (June), we now appear to be entering a period of recovery.
“While remain cautious, and while further industry consolidation should be expected, we can be optimistic about the medium and longer term, through to the end of the forecast period in 2024.”
AMA highlights the highly competitive nature of the residential window market in particular suggesting that the fortunes of those who operate within it, will again vary according to product offer and material type.
“Ultimately, the industry is mature and, in the longer term, heavily dependent on replacement demand in the residential sector”, Jane added. “That in return is reliant on consumer confidence.
“Covid-19 has come with significant economic cost. The continuing challenge for companies – and the longer term one – is to adapt to the trends which were defining the window and door industry pre-lockdown.” For further information please call 01242 235724, email email@example.com or visit www.amaresearch.co.uk.
I’m not convinced on the V-shape theory yet. Half of economists say there will be, the other half don’t. For me, there remain too many risks to fully bank of a V-shape recovery. Obviously, I’m happy to be proved wrong as it means more stable a prosperous times ahead. But when I look at what is coming down the road in the coming months, I think the recovery, which needs to be measured in years not months, will look more like a W.
When we hit October, the furlough scheme will come to an end. August is the start of the period where businesses will be asked to start to contribute to the cost of furlough. That is when we’re likely to see an increase in redundancies. Indeed, we’re already seeing a sharp increase in the number of people no longer on payroll, 612,000 losing their jobs between March and May, and that is with furlough in place. Some of the employment forecasts look grim, and if they are even only half true, then it will have a negative knock-on effect for the economy.
Then there is Brexit. If we get to the end of October and it’s not clear if we’ll have a deal with the EU or not, and you add the end of furlough, it could be a really choppy end to the year for the UK. There was some level of optimism that a deal could be done with the bloc after a meeting between Boris Johnson and the EU’s Ursula von der Leyen, but detail has been lacking since their encounter.
There is also the real prospect of local and regional lockdown measures to keep fresh outbreaks at bay. A risk strenuously highlighted by the PM today as he announced what further measures would be relaxed. We have seen today in Germany that a region with a population of 360,000, North Rhine-Westphalia, has had to reinstate lockdown to keep a fresh outbreak under control. With regular flareups, any economy would be held back in part.
The major key to any of this is the prospect of a quality vaccine. Create one, and all of this goes away in as quick a time it takes to produce it and circulate it. If medical tests fail to produce one then this is a long haul and we’ll be living with it in some shape or form for years to come. Remember, there were efforts to find vaccines for HIV/AIDS, MERS and SARS. We don’t have them to date.
A W-shape recovery for me is the more likely scenario. Ideally, a more sustainable, steady recovery based on sustainability would be the better way to go in my opinion. Something that can be sustained, rather than rising too quick simply to run out of steam and slip back again. We also have to rebuild our sector and wider economy on a much greener footing. Never have we ever had a chance like this to rebuild an entire economy and have the chance to do it better than the last one. We can’t let that opportunity slip away.
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