Renegade Conservatory Guy

The double glazing industry - my predictions for 2008

For an industry that has been struggling for a number of years, it is hard to believe that 2008 is likely to be a strong year for us all, but there will be opportunities out there for those that differentiate themselves.

I’m really sticking my neck out here, but below are my predictions for 2008. Please feel free to comment if you think I’m way off the mark.

Installers
It’s very tough for smaller installers at the moment. Many of the one man bands are sitting on worryingly low order books at present compared to previous years at this time. I spoke recently with a great guy from Widnes who had orders until April at this point last year. In 2007, in the run up to Christmas, he has a set of French doors to fit.

For installers like this it will be very tough, and I predict many will cease trading in the first month or two of next year. They’ll either go bust, or just pack in and look for work elsewhere. Some will find work with larger installation companies, others will find work in other industries - which will not be a bad thing!

The problem for many of these smaller installers is that they do not know how to adapt to changing market conditions, and scratch their heads when the ads they place in free newspapers no longer stimulate the phone to ring.

Larger regional installers will also have to cut their cloth accordingly. Monthly sales figures are likely to be lower and unless the home improvement market bounces back then they will be forced to look at their overheads, and make cuts. Those companies with a bit of wool on their back will survive, and may be in a strong position should things pick up.

The national installers will similarly have to take a good luck at their businesses over the next 12 month. Safestyle have recently been making major cut backs, and Anglian are diversifying into other home improvement products.

Manufacturers
I feel that there will be a number of the very small manufacturing companies who decide it’s just not profitable to be paying staff and making less than 50 frames per week. There has been a movement in this direction for years and I feel it will continue. Many of these small fabricators will make more profit if they concentrate on selling, rather than manufacturing.

I feel that there will be growth for a number of forward thinking medium sized manufacturing businesses, such as Lister Trade Frames, Glazeright, Direct Trade, and Conservatory Outlet. These companies will develop strong marketing strategies, continue to develop their manufacturing facilities, and benefit from smaller fabricators packing in.

For the larger super fabricators, I predict another tough year. Many of these firms are slow to adapt to changing conditions, and with large overheads they will struggle to make profits in a market place with falling margins.

Hardware companies
With the rebate being removed from Chinese manufacturing businesses and higher raw material prices, I feel it will be difficult for hardware distribution companies to pass on these costs to the manufacturers. Most hardware companies have lost money in 2007, and clearly this cannot continue. 2008 will be a key year for companies like Laird, Mila and Avocet.

It’s a difficult position for hardware companies who are absorbing major cost increases, and trying to pass these costs onto an industry struggling anyway.

Glass Suppliers
The cartel which dictates prices to the glass industry will continue to collude, in my opinion, on pricing despite the recent slap on the wrist from the EU. However, they will likely do it in a more subtle way.

Sealed unit manufacturers
I feel that those manufacturers who invest in toughening plants, and develop solar control units and energy efficient products will do well. Those companies who embrace the Window Energy Ratings movement should succeed, whereas companies who do not adapt will struggle.

Conservatory Roof System Companies
I feel Ultraframe have got their house in order over the last 12 months and will stabilise their market share, if not grow it. With the new management team and a leaner operation they now compete fair and square with other roof systems, and still have the only brand name arguably. Synseal will continue to compete strongly, although I do not believe they will dominate the market like it appeared they would a couple of years ago.

Hopefully, the Burnden Group will see good sales figures next year as it is important to see healthy competition in this sector. I cannot see any of the other roof systems making major headway in 2008.

Profile Companies
The consensus of opinion seems to be that there are too many extruders, and as many of them are experiencing lower sales and losses, we must expect further rationalisation of this sector. Whether fewer extruders in the future is good for the market is matter for debate, but it seems pointless having 14 or so major extruders with most of them struggling.

Opportunities
There are some great opportunities for the market as a whole, many of these are being mentioned regularly in the trade press. My pick of the best opportunities are:

I would have added composite doors to this list, but I would rather wait and see how the Global composite door performs.

After 2008
I feel that next year will be very tough, but the long term can be very healthy if as an industry we embrace opportunities. We need to work hard to educate consumers about the benefits of energy efficient products, high security products, the investment potential of conservatories etc.

If you disagree with my predictions, then please feel free to comment. After all, I just see things from my little part of the marketplace!