2023 saw the demise of Safestyle UK and the UK Windows And Doors Group. It saw Evolution saved via purchase by Everest, and there were a number of other middle-tier bankruptcies during the course of that year.

It is hard to ignore the data that has been coming out of connected industries such as the construction sector, where insolvencies in that part of the economy are at their highest since the Great Recession.

So as our sector tries hard to seek to be more positive in 2024, are we in for another turbulent year?

Shaky numbers

2023 for fenestration wasn’t a great year. You would call it the hangover year after the post-lockdown boom that saw the supply chain crippled and lead times for installers stretch out into months, rather than weeks. But as it always is, what goes up must come down, and last year we saw the demise of two major players and employers within the sector.

If we wanted to try and grab a snapshot as to how our fortunes may fair this year, we could look at our bigger sister sector in construction. And you have likely been unable to avoid recent headlines and reports that say there was a near 36% rise in construction firm insolvencies in November 2023 compared to November 2019, which is the safest comparison to make when you take out COVID-affected years.

The start of the year hasn’t been that much better. For wider context, check out the latest brick delivery figures, which are a good proxy for measuring the health of the house-building sector:

These brick levels are the lowest since the Great Recession when you factor out the COVID-induced recession. Not a great signal for the health of the construction sector, and indeed this will have ramifications for the fenestration sector, with a number of our installers directly connected to the new-build market.

So we start the year with some shaky numbers, and with reports that a recession in the UK looks set to be confirmed soon, and inflation potentially rising again, it does look like we are going to see a continuation of the difficult trading conditions that made 2023 a tougher year than people had perhaps anticipated.

More casualties or buyouts?

I think many of us are pondering as to whether we will see more high profile casualties this year as we did in 2023. Although we knew Safestyle were not in the best of health, and their share price had been in a steady decline for a number of years, I’m not sure we thought we would see the demise of one of the largest installers in the UK in 2023. But we did, and even though we lost UKWDG in the summer, I think the loss of Safestyle really underlined the fragility in certain parts of our market.

And that there is an important point. It’s not everywhere that will struggle. The higher end of our market, the niche and the luxurious will continue to do well in my opinion. Those with money will spend money, and when they do, they buy well and will opt for higher quality products, especially in the aluminium part of our market.

The companies that went under last year were very much in the mass volume part of the market. With notably thinner margins, even a modest drop in demand can pull the rug from under some companies. Add in to the mix higher interest rates, rising material costs and reduced demand, it made for a toxic mix that was the making of the end for some.

I do not see much of a change in trading conditions for our market. Labour costs remain high, and we are starting to see some price increases creep back in. Inflation looks set to be higher for longer, and if a recession is confirmed, the headlines that will be generated from that news aren’t going to be all that encouraging for people’s spending.

So does that mean more casualties in 2024, or could we see something different? We have already seen Endurance and Brisant make major acquisitions in the first few weeks of this year. Both are key market players with the spending power to acquire competitors or find new ways into new parts of the market. Whilst I think we might still see one or two big names go this year, I also think we will see more market consolidation with larger and wealthier companies making the most of their dominant positions to soak up more market share or enter new markets without having to invent new products themselves.

I still think it’s going to be quite a volatile year, and we haven’t even mentioned the cost of energy, living and the upcoming election. It is best to be prepared for all outcomes, assume a recession and if it doesn’t come then it is a bonus, and keep focused on the work that matters and is most profitable to you.

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