I found an interesting article in The Independent about how the chain of events which started with salesmen on commission wildly dishing out sub-prime mortgages, ended with an IT worker, Jackie Horn, at Chemix Ltd (a manufacturer of the compound for PVCu windows) losing her job.
It’s a long story which you can read here, and gives an idea of how the domino effect is likely to have a dramatic effect on all sectors of the UK economy, especially ours.
In this instance, Jackie lost her job because Chemix Ltd ceased trading.
The chain of events:
* The fall-off in demand for Chemix’s products was the result of decisions like the one made by a Birmingham newsagent whose domestic economizing including not having his windows replaced with uPVC frames because his cigarette sales were down.
* Cigarette sales at the newsagent’s had fallen because staff at the nearby Range Rover production plant had had their hours cut.
* Range Rover sales are down because a wide variety of businesses are now tightening their belts; not replacing company cars is an obvious money saver.
* Among the businesses not replacing company cars as part of general cost cutting are those like the shop-fitting, sign-writing and advertising firms employed by retail giant Marks & Spencer, which has had two-thirds wiped from the value of its shares this year.
* Trade in shops is down because consumer confidence has fallen in line with catastrophic drops in the price of shares.
* Share market volatility was provoked by the sudden refusal of the banks to lend money to anyone, including each other.
* The crisis of confidence within the banks was fed by the collapse of Lehman Brothers, which was the biggest bankruptcy the world has ever seen.
Ironically, prior to being made redundant, Jackie had been thinking about having some of her windows replaced, but has had to put such thoughts on hold.
The domino effect…..
5 responses so far ↓
1 Sean Mc - MTD Sales Blog // Nov 18, 2008 at 7:03 am
Thats a great story and illustrates not only the knock on effect of business events but it also illustrates how susceptible we all our to the media and the role they play.
The media only reports on the negative - it sells more papers. So when we hit a “recession” they are all over it. “Job losses to top 1 million”, “Unemployment up to 1980’s levels”. They feed on this and it makes businesses and the consumer lose confidence in the economy and hence they tighten their belts.
Sean
2 Ian Longbottom // Nov 18, 2008 at 7:58 am
There were two programmes on the TV last night which higlighted, for me, how to act in a recession and how not to…
One was titled “How safe is your job”.
Need I say more?
The other “Location Location Location - A survival guide”
The latter a breath of fresh air.
It’s a tough life. Especially in a recession but chicken licken saying the sky is falling in never helped anyone. Far better the outlook “every cloud has a silver lining”. There are threats out there, yes and opportunities too. Bargains to be had, competitors dropping out etc etc.
I just get so tired of doom mongers!
…but not, apparently, crap TV!
Ian
3 Paul // Nov 18, 2008 at 4:23 pm
Often in previous recessions, interest rates have been high and these affected many people who had mortgages. Some handed their keys back, but they were not buying high ticket items anyway, so did not essentially damage our domestic window industry beyond recovery. Yet, even with today’s lower rates ,the spending is still held back by those with a mortgage, they just get some relief, thats all.
A huge number of people don’t have mortgages (far more than most people think) and they are usually happy to spend if they get good interest on their money. Sadly, the low interest “answer” to our current woes may stop BOTH types from stimulating the economy rather than lifting it in the way expected, short term Christmas shopping expenditure apart.
Those in our industry who shepherded their money during the Feast Years will survive the Famine Years, leading to a clear out of unhealthy companies. This can only do the industry in general good providing that these companies don’t resurrect in another guise .
And then the good guys can attempt to price upwards when less extreme and unfair competition have been culled.
Incidentally, I have noted the Auction listing of Speedframes goods - the sheer quantity of items for sale is mind-boggling. This sort of fast track empire building creates shudders through our industry and leaves destruction in its wake viz a viz Planet etc,etc. One minute these ones are getting awards for industry from government rewarding fast growing companies who shaft the competition.( The sensible competition get few awards for trying to generate a sustainable profit producing scenario as it slows break-neck growth.) Next the tumble into oblivion taking innocent suppliers down their rocky roads. And leaving battered competition in their wake.
Those prolific numbers of goods for sale at Speedframe should now be a sign of the utmost shame. Yet not in the eyes of the megalo maniacs who build these mirror glass edifices to excess. They just tend to start the whole awful process again to the detriment of the industry, others, themselves and their family units.
Often their only long lasting reward for their avarice is the divorce court
Paul
4 Ian Longbottom // Nov 19, 2008 at 7:18 am
Hi Paul,
I can’t speak for Speedframe, whose demise (and supply agreement with Barratts) seemed to coincide with the near shut down of the new build market.
Unlike Planet who was run by a man who was ruthless enough even to rip his own brother off.
Have you shepherded your money?
Good for you if you have. My ex wife shepherded most of mine - so don’t be too hard on us divorcees . . . there’s quite a lot of us in this industry!
I note from your website that your door section is still under construction. .. somewhat like the patio door offering from Veka. That could leave a hole in your offering in difficult times?
In the meantime you could order another patio door which is approved and covered under Network Veka’s guarantee (not to mention BBA, Secured By Design and over 500 other companies!). And we also make Veka Sash windows too
We’d be glad to hear from you . . . and maybe we could cheer you up a bit?
Best Regards,
Ian
5 Mike Spain // Nov 19, 2008 at 9:02 am
Fast Track Empire building? Speed Frame have been around years they have simply fallen victim of being mainly in one market “New Build” which as we all know has experienced a bit of slow down recently.
Healthy competition is the life blood of any industry and that doesn’t just mean competitive prices, developing your products to differentiate them from your competition and being the best you can to your customers all can be counted as competitive practices.
Investing in your business rather than hoarding cash is the best way to protect yourself against the tough years when they come, putting your self ahead of your competition and then telling the world about it. It’s no good having the best products in your sector if you then decide to cut back on your marketing.
Yes we are going to see tough times for, I think, at least the whole of next year the question is how bad will it get. That will depend on the level of confidence in the wider economy and that is where the domino effect will play a part. The more we talk up the possibilty of it being a long and deep recession the more chance that will become the truth.
I listen to Radio 4 a lot especially The Today progamme and PM and I find myself on occassion shouting at the various presenters for their negative take on everthing, spinning bad news into disastrous news but I have to remind myself that good news doesn’t sell. Only this morning there was a report saying that for the second month running the average estate agent sold more houses up from 6 in September to 7 in October. Not massive improvements but in the right direction, but this was a passing news piece not the subject of comment or question…..
Leave a Comment