During the course of last week, it became apparent that a number of fresh price increases were about to hit the windows and doors market. And we’re not talking about small single-digit increases here.
Until now, I would have said that the balance of rising costs versus the ability for homeowners to pay it was about right. However, I believe we have sailed past that equilibrium and we’re headed for problems.
New raft of price increases for new windows
Prices have been rising for the last 18 months without any let-up. But some of these latest increases are particularly steep. Here are a few of them:
- Certain glass products to rise by 15%
- Certain aluminium systems to rise by 16%
- Steel to rise by high double-digits
One letter to customers lays out the total increases in raw material prices since the start of the year:
- PVC: up 41%
- Steel: up 94%
- Stainless: up 40%
- Aluminium: up 44%
Those are raw material costs. Now add to the mix that wages have gone up double-digits, as has the price of energy.
This particular raft of increases however is particularly steep. And a number of suppliers are now doing what has been long predicted and turning the temporary surcharges into permanent price increases. That will perhaps be less of a shock as no one really expected those surcharges to actually materially be reversed.
One particular supplier however did supply within their letter to customers a number of charts to show how far material prices had risen, and where the line lies before prices can be reduced. The reality is that we are miles off prices becoming stable, and most of those charts were still on an upward curve.
The reality is stark. The marketplace for raw materials is incredibly unstable. Global demand is pushing prices higher, with raw materials, as well as transport, going to whoever can afford it the most. This drives costs up further. The effects are then seen further down the supply chain, which reflect in 15% rises in costs of glass for example.
At the moment, there is little sign of stability coming. Suppliers are warning of costs rising into 2022. This was different from only a couple of months ago when there was perhaps some optimism that the end was in sight. It appears not.
My more immediate concern however lies with the spending power of the public.
A tipping point reached
As an industry, we are now being buffeted from two sides. The first is the cost of raw materials. That has seen inflation in our sector rise dramatically, as per the bullet points above.
The second is the cost of living. Food shortages, benefit cuts, rapidly rising inflation, petrol and diesel costs up, gas prices up. The day to day cost of living in the UK is rising fast for many and is taking not only spending money out of people’s pockets but confidence too. In the midst of a wave of rising prices and Christmas around the corner, I fear public spending on big-ticket items is going to be reigned in significantly.
We are now at a pinch point. Perhaps sooner than we all thought. But then again inflation and the breaking down of various supply chains has happened pretty quickly too.
Only a couple of months ago I believed that we were at some kind of balance with the public. That even though prices were rising in our sector, the public did seem to have the ability and willpower to pay. I sense that this situation is now changing.
Sales at our places have slowed in comparison to only a couple of months ago, and it’s noticeable. We have four months of work already ahead of us, so there is no imminent problem in terms of installations. But I have spoken with a large number of installers over the past couple of weeks and there appears to be a definite shift to slower sales over the last couple of months.
For fabricators and systems companies reading this, you may well think differently. But with installers sitting on so much work in advance, fabricators and then systems companies won’t feel the effect of any kind of slow down for a while. Perhaps not until closer to the end of the year or even the New Year. There is however a definite move to a different trading environment for installers.
I do now fear that for some portions of the public, the price increases within our sector are now putting the idea of new windows and doors out of reach. This has always been the risk. That the public can take so much inflation, but there is a limit. I believe we are there.
As a result, with the economic backdrop looking far more serious than it did in the summer, coupled with constant fenestration sector price increases, I believe we’re in for a very tough winter compared to the last 12-18 months.
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Interesting, are you seeing a consistent level of enquiries as before but a substantial decrease homeowners agreeing to have the work done purely down to price?