Monday: Britannic Trade Frames Limited – https://www.thegazette.co.uk/notice/4603346
Tuesday: Centurion Windows Limited: https://www.thegazette.co.uk/notice/4604808
Wednesday: Aluminium Windows Ltd – https://www.thegazette.co.uk/notice/4604342
That is just the first three days of this week. Everest are up for sale and looking for an immediate cash injection. Argal (Architectural Glass & Aluminium Ltd) went under a couple of weeks ago.
This follows on from a rough Q1 which saw other industry casualties such as Prime Glazing Supplies in Bolton, Euramax and the company installaing the cladding and facades at Everton’s new football stadium.
Market downsizing
It is becoming clear that the market is now adjusting to the current demand levels. We are certainly way past the post-lockdown boom which crippled the supply chain and sent installation lead times into many months.
Inflation, the cost of living, wars and rising interest rates have now taken their toll on the economy and consumers have changed their spending accordingly. And as we have seen, the vast majority of the industry casualties over the past year have been the high-volume/low-margin reliant companies. Although the drop in demand probably isn’t like what we saw during the Great Recession and financial crisis, it has been enough to pull the rug from under some businesses.
The industry is now rightly asking itself what business models are best during times like these. Companies that rely on mass volume and low margins on each item are very much at risk at the moment. Business running costs remain high and likely won’t be dropping. They are having to tackle lower growth and lower demand. It’s a bad mix that is leading to some companies having to close their doors. And don’t forget the slowing construction sector is also having an impact on companies that supply windows and doors into new-build housing companies.
I foresee, sadly, more casualties over the coming months as our sector gets used to a different level of business activity. Lower demand requires fewer companies, and those in a weaker financial position, with major debts and interest on those debts are going to be in the firing line. This could also be a good time for financially stronger companies to look to acquire either competitors, or companies that will allow them to enter new parts of the market without having to build a new business from the ground up.
The other side
While the attention, rightly, goes on those that go into administration, there is another thread to all of this which is that smaller business are, on the face of it, doing better. And by that I mean SME installers.
These are companies that tend to adapt to changing conditions quicker and with less strife. They are able to adopt new products and marketing approaches better than bigger companies and have lower overheads which puts them at an advantage. Our family run business is in that bracket and through hard work and a bit of vision we are finding 2024 to be a pretty good year, thanks to a new focus on aluminium and higher-end work.
This is perhaps where we might see more systemic change in the sector. I think we all accept that the business models of old, the ones that large regional or national installers continue to use, are no longer fit for purpose in this new consumer age. I believe we will see a sustained shift away from larger businesses to more successful local companies on the installation side of our sector. The bigger the business the bigger the mouth to feed and right now there isn’t enough to go around.
I also think that by the end of this year and the start of 2025, those who have managed to make it through this very difficult patch will find lots of potential in the next few years, which is what we saw happen after the worst of the financial crisis in 2008 and 2009. It is periods like this, akin to a big shakedown, which makes the diamonds shine and the deadwood drop away. When this is over, we’ll be left with the better quality businesses who will be in a good place to make the most of all the new opportunities coming their way.
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