As the industry approaches this downturn and recession, you’re going to hear a lot about 2019 and “pre-pandemic” figures. We knew 2020 and 2021 were simply bizarre years in the business world.
Demand was sent artificially high as a result of lockdowns and Government stimulus. The Black Swan event forced people to rethink how and where they spent their money. The fenestration sector was a large beneficiary of that.
Now, the boom is most certainly over, and although you won’t hear this much in public, the bubble is deflating a lot faster and a lot harder than people either thought or hoped would happen.
But the comparisons to 2019 that we’re going to inevitably hear about to try and soften the tone of what is going to be a hard landing are going to need to be taken with a pinch of salt.
We’re not the same industry
In an effort to manage the brutality of the boom in 2020 and 2021, UK fenestration needed to expand. We clearly were not ready or expecting anything like what we saw happen. Almost everyone was on the back foot as soon as the first lockdown came to an end in May 2020.
The result was that many companies at all levels of the supply chain expanded as fast as they could to help manage the demand flooding through their doors. Extra staff were being hired at fabricators. Fitters were being sought at installation companies. Systems companies needed everyone! Many invested in new warehouses to help increase stock holding. Lots bought new machinery to process more frames per week and add more products to their portfolios.
This investment and expansion were good news for the industry. We’d been grinding along for the best part of ten years, operating within our normal range, not really breaking new ground. Then suddenly we were all tripping over more work than we could handle. Within weeks, our industry was a lot bigger than it had been for many years. Sales records were being smashed. More frames per week than ever were flying out of the doors of fabricators. Systems companies were making so much profile that on the odd occasion basic White profile was hard to get hold of.
It was very clear that we were no longer the same industry as we were in 2019. We were a lot bigger both in terms of revenues and profits, as well as personnel.
The economic circumstances are now very different, and if you observe closely enough, you can see an industry that is beginning to get very twitchy. So, to negate some of the potential commentaries about the industry slowing down, you’ll begin to read bits of PR and news where comparisons of 2019 are used to quantify the scale of the slowdown.
But it’s not as easy as simply saying “we’re back to pre-pandemic levels”. In 2019 the industry was in rather a rut. Coasting along. We were also a much smaller sector than we have been of late. Revenue was smaller. Profits were smaller. Recruitment was not as hot. If we’re comparing 2019 to 2022, that would be a mistake as the industry is in a very different place.
This was always going to be a struggle. Could the industry, even in the face of a downturn, be able to maintain the new heights it had achieved over the past two years? Remember, investments have been made. New jobs have been created. Companies have bought new units and offices. Fabricators have bought lots of new machinery. All of this needs to be paid for.
A boom that would always fade
I did find it very odd that during the height of the boom, there were some predictions that the level of demand we saw in 2020 and 2021 would last for a fair bit longer yet. There were some suggestions that it could be like that for years.
Given the insanity of the pandemic years, you could forgive the industry for getting a bit carried away with itself. Many of us had never experienced what was happening. But an economy that was running red hot, boosted by hundreds of billions of pounds of Government support, the situation of cripplingly high inflation and the resulting cost of living crisis were always going to be the likely outcome. In short, this is what demand destruction looks like. Fuel a boom so much that it blows itself out. And as has always been the case, the bigger the boom, the bigger the bust. A soft landing is very rarely achieved.
What we need to be doing less of is looking back to 2019 as a marker. Yes, from a data perspective that is the last “regular” year we can compare back to. But as I have mentioned above, we’re in a very different place compared to back then, and the industry is a lot larger, a lot more diverse and with new higher levels to maintain.
Let’s not look at 2019 as a marker we think we can slip back to. We need to continue to look at 2020 and 2021 as the new markers. If we don’t, and we start to scale ourselves back to 2019 levels, it’s going to mean job cuts, less investment and rolling back of some serious progress that has been made in very difficult circumstances.
I’m not saying that this is going to be an easy thing to do. Financial conditions during the boom period were incredibly good. It’s very different now and we’re all going to have to work very hard for every single sale. But we have the tools, we have the products and we have new skills to deploy that were learned during the high-pressure periods of the previous two years. So let’s aim to stay at the loftier heights we all worked so hard to get to. Let’s not use 2019 as a lazy comparison, because we all know we’re a very different industry now.
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