As the saying goes, the bigger the boom, the bigger the bust. 2020 and 2021 were major boom years for the fenestration sector, as the public invested their spare cash into their homes.
Now, as rampant inflation spirals out of control, and a cost of living crisis hobbles consumer spending, our industry faces perhaps the most prolonged period of difficulty since the Great Recession of 2008/2009.
Do not wait until it’s too late
Last week we got a huge dump of data and predictions from the Bank of England. It was essentially confirming what we all knew was happening in our economy already, but it spelt out clearly the problems the UK economy faces in the next 18 months. These were the key points from the Bank of England forecasts:
- UK to fall into recession by Q4 of 2022
- BoE predicts recession to last until end of 2023 – some estimates say 7 quarters of recession are possible
- GDP set to fall by 1% in Q4 of 2022
- Inflation expected to peak at 13.3% according to the BoE, some estimates go as high as 15%
- Inflation is expected to stay near 10% throughout much of 2023
- GDP is forecast to fall 2.25%
- Unemployment is forecast to rise from 3.7% to 6.3% in three years
That is about as grim a set of bullet points as you could wish to see. Be that as it may, that is the new reality we now face as a sector. We have spent the last two years enjoying unprecedented demand. This is the hangover.
Perhaps what concerns me the most is this particular nugget from Noble Francis:
We have been enjoying the public investing in their homes for a prolonged period of time. Now we’re looking at the public scaling back home improvements over the next couple of years. There is a genuine chance that the progress and expansion made during the last two years will be unwound.
But here’s the thing about forecasts; they’re meant to be broken. If we know what is coming down the road, we can adapt. We can change things. Try new ideas. Invent and innovate. The progress we have made will be given up only if we let it. We have to work even harder to maintain the ground we have gained.
New products key to success
2023 and 2024 are going to be hard. Easily the biggest period of instability since the Great Recession of 2008. Although the drop in GDP won’t be the same as back then, the general public is going to feel this perhaps even worse. During the 2008 crisis, there was no cost of living crisis, no war in Ukraine, no rampant inflation. There was the Lehman Brothers bankruptcy and the financial crisis that followed. But the personal cost of the problems back then was not as acute as they are right now.
This is the new reality of upcoming trading conditions. The silver lining is that we know what is coming down the road. You won’t get much honesty in the PR that goes out to the press, but the honest conversations I am having indicate that the downturn is in full swing in a general sense. The advantage we have here is that we know what we’re facing so we can begin to act immediately rather than wait until conditions deteriorate further.
New products will be the key to finding new success in tougher times. It’s what we did during the last recession and it worked well for those who committed to that investment.
Both fabricators and installers need to be looking at what more they can offer. For example, fabricators that only currently produce PVCu products really should consider adding an aluminium offering. There is huge growth in this area and there will be for a while to come. Rather than have installers dual-source or look elsewhere for their aluminium needs, fabricators who can offer both will ensure their existing installer clients are spending as much as they can in one place.
Installers need to be looking at what they are offering the homeowner. I have mentioned aluminium, but other parts of fenestration are growing well, such as flush windows, lantern roofs, and high-end entrance doors. Although certain demographics are going to struggle in the coming years, others won’t.
All companies up and down the supply chain need to be expanding what they offer. New products open up new opportunities, and as well as trying to give existing clients more to sell, finding new clients is going to be very important in the coming months as well.
Make no mistake, there is a lot of hard work ahead, and there may be some tough decisions that plenty of us have to make. But nothing is set in stone, forecasts are indeed only forecasts and we have all the tools we need to make the most of any new opportunities that come our way.
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