If you keep up with such things, you will know that there has been a run of bankruptcies within the fenestration and wider construction sector which has underlined the fragility in the marketplace right now.
I want to go through some of the notable ones and explore what it might mean for the fenestration sector.
Who has gone?
The biggest and most recognisable name to go outside of the fenestration sector is modular builder Ilke Homes. Based in Knaresborough out of a 250,000 square foot unit, the company went into administration on June 30th and immediately ceased all operations. Most of the companies 1150 staff have been made redundant and operations across all sites have been stopped. You can read more about that story here: https://www.housingtoday.co.uk/news/ilke-homes-goes-into-administration/5123941.article
Although in the housing sector, Ilke Homes would have connections to the fenestration sector via supply of windows and doors to the business. It is not yet known at this point what companies in fenestration are exposed to the fallout of this.
Back to fenestration now and on June 22nd Shield Facades Limited was liquidated. Shield Facades, based in St Helens, worked mainly in the commercial space providing curtain walling and facade solutions to large residential and commercial buildings. Their website is no longer available to view, but you can see via their Linkedin posts that they sourced products from Senior Architectural Systems and Carey Glass. You can find out more details about the company via Companies House: https://find-and-update.company-information.service.gov.uk/company/11770645/filing-history
Another name with a question over their heads is Trent Valley Windows. I was alerted to them via this notice in The Gazette: https://www.thegazette.co.uk/notice/4388833. If you do a search of the company name it takes you to the website of Trent Valley Windows Ltd in Nottingham, which obviously does not match up with the registered address used in the Gazette notice. So, if you do a search of the company number noted in the Gazette, and look at some of the public records of the company showing it registered in Huddersfield, the website they list as that of the company still takes you to the company in Nottingham. So not sure what the significance of all that is there but there is a meeting to wind up the company noted in The Gazette on July 13th.
Next up is a company called Frames Conservatories Direct Ltd based in Norwich. Established in 2021, the business filed for administration on June 13th. You can view the records on Companies House here: https://find-and-update.company-information.service.gov.uk/company/04196958/filing-history. The business is believed to operate a significant number of fitting teams.
The above are just some of the notable ones. A deeper look into The Gazette will show a significant uptick in the number of fenestration and construction companies that have been closed.
Victims of the downturn?
The main reason given for the companies mentioned above going under is down to economic conditions. Now it would be easy to comment and say that it’s simply mismanagement after the boom of the last couple of years and that no company should be going under. As we have seen with the closure of Duraflex that is not always the case.
But the boom was also accompanied by rising material costs and wages. So whilst the revenues were high, profits may not have rose in the same manner. And when a downturn hits, that reserve of money that everyone thinks builds up during the good times is quickly drained by weekly wages, invoices, tax bills and so on. If the revenue that was there to support that kind of spending suddenly stops, that money quickly dwindles.
Personally, I believe that we are at the start of a 9-12 month period where we are going to see an elevated level of companies going bust. Primarily, the ones that have a business model that required large volumes at low margins. These are the types of businesses where even a modest drop in demand can quickly become painful.
Companies that funded their growth through the boom period via loans may also be at risk. Rising interest rates coupled with a slowdown in demand is a nasty mix. Where possible, reducing that debt is going to be of great importance.
I think it is possible we will see a couple of big names go in the next few months as well. I am not aware of something specific, but given the unstable conditions we’re operating it, I think it is distinctly possible.
Rough times ahead.
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