Renegade Conservatory Guy

Window Industry in recession - will the interest rate cut make a difference?

It’s clear to me that even though the economy as a whole may not be quite in recession, our particular part of the economy is clearly in recession. According to the BBC website:

A technical definition of a recession is two successive quarters when the economy shrinks.

Well, the window industry has had 2-3 successive years of shrinking, and the outlook is for further shrinking over the coming years.

The latest quarter point cut in interest rates will help, but I feel it won’t make enough of a difference to our industry.

The latest AMA report into the replacement window and door market confirms the problem:

The UK market for replacement domestic doors and windows is facing major challenges in 2008. The market is large, but mature, and volumes are declining. As companies compete for business in a strongly price oriented market, major problems have resulted in substantial restructuring in 2007, as the market adjusts and consolidates.

The following table highlights the problem:

AMA predict things are unlikely to change in the short term:

The overall prospects for the replacement doors and windows market for 2008 remain downbeat, with a forecast decline of around 3%, reflecting a combination of market saturation, continued pressure on prices throughout the supply chain and the impact of the current credit crunch. In addition, the economy is set to slow down in 2008-09 and falling house prices are also likely to slow the market. In the medium term, some recovery may be achieved and the sector will offer growth prospects in some niche applications.

Individual companies can buck the trend by differentiating themselves from the rest, and offering either different products or a unique type of service. But for those wishing to manufacture and install ‘bog standard’ shiny white plastic windows things don’t look good. Conservatories have plugged the gap over the last 5 or 6 years, but even demand for conservatories in the UK is falling.

We need to work together to stimulate demand for our products. I feel that we need to create an organisation which has the primary goal of advertising and marketing the main selling points of our products:

Instead of Synseal, Pilkingtons and Joe Bloggs Window Company all sending different advertising messages to the consumer, why don’t we all consider putting money towards a central body which promotes the industry as a whole to the end user.

I predict that a £10m TV advertising campaign selling the benefits of replacement windows and doors to the consumer would have a dramatic effect on the graph above.

There are lots of problems we face as an industry, but I believe the main problem is simple - a lack of demand for what we are selling.

The problem is getting people who compete with each other to work together…