From: Rob McGlennon, Managing Director, Deceuninck
Supply chain security, surcharges and end-user demand. It’s a heady mix of opportunity and challenge.
COVID-19, Furlough, the Stamp Duty holiday and the plethora of bounce back loans and tax breaks unveiled by the Chancellor Rishi Sunak, have created a unique environment for business, and closer to home in our own sector, a period of what is unprecedented demand.
And that has brought with it a unique set of challenges.
Now before I move onto discuss them, it’s worth everyone taking a moment to ‘pinch’ themselves. ‘Yes’, you are awake; and ‘yes’, a market which was almost written off as saturated, is seeing exponential growth. This is a good thing, so let’s remind ourselves of that.
But in amongst this positivity there is a clear challenge, how do fitters, fabricators and not least systems companies, keep up with the demand that we’re seeing.
And we’re now hitting a little bit of a crunch point. There’s immense pressure on every part of the window and door supply chain, from glass, to hardware and profile – I don’t believe that there isn’t a supplier feeling the strain.
As a systems company we also have our challenges. While we have planned for growth, increasing our capacity and building up stock, we need raw materials too. The pressure on polymer supply is well documented in the force majeure statements issued by polymer manufacturers and the warnings issued by industry bodies in response.
The pressure on the availability of resin isn’t a challenge exclusive to the window and door industry – it’s effecting every industry which uses plastics from food packaging to plastic carrier bags. Polymer is in short supply.
That’s doing what it always does – it makes it a sellers’ market. The price of polymer has increased every month for the last 11-months. Systems companies can absorb some of the hits, but the reality is that some of those increases are temporarily going to have to be passed on to fabricators in the form of surcharges.
What is vital is that they are passed on by fabricators, right down the supply chain to installers and ultimately – the end user.
Surcharges are never going to be palatable but they are necessary. And if we do what we should and pass them onto the end-user, things remain sustainable.
Homeowners are seeing their property values rocket. According to estimates by the Bank of England Monetary Policy Committee, consumers are sitting on savings of £125billion, so I don’t believe that they are going to bat an eye lid if they have to pay a couple of hundred quid more for their windows now than they would have done two-years ago – if it even registers.
What they will notice is their windows not turning up because of availability of product. We’re as prepared as we can be. We have scale, purchasing power and reach. But we are also paying more and we are not immune from the pressures faced more widely, not only in the UK window and door industry but globally.
We will do our best, we know that our customers will, and we hope their customers will follow suit, but there will be bumps in the road. As we face them, we could all do well to remember that there are worse challenges to face than exponential growth in demand for our products and our services.