Keeping up appearances

Glass Times editor Nathan Bushell considers the strengths and weaknesses of the current market.

Robert Palmer said that the realities of a hard Brexit are starting to exert an impact on consumer confidence and with it economic growth, which slowed in the first quarter of 2017 to just 0.2% – the weakest in 12 months.

“The Office for National Statistics attribute this slowing to the decline in growth to consumer-facing industries and a slowdown in household spending,” he said.

However, the Federation of Master Builders has found that the construction sector continues to grow, despite rising material costs and wages, and the difficulty in hiring specialist contractors.

This is a theme that has been building a head of steam for the last few months now – that all the evidence points to a cooling economy brought about by consumer uncertainty, for which we have to thank, in a large part, the realities of Brexit and an ill-judged general election. However, the anecdotal evidence from companies on the front line appear to point to a less apocalyptic near future.

From my own conversations with companies, it is becoming clear that a reduction of volumes of 5%-10% isn’t unusual, and some are seeing their orders drop by up to 15%.

I’m sure many will take this in their stride, but we may start to see a repeat of what happened five or six years ago, with smaller window companies deciding to buy in rather than fabricate. This would take the pressure off the larger fabricators.

I wouldn’t be surprised if we also saw more consolidation among systems companies. The price of raw material has shot up over the last three years, and that is putting a huge amount of pressure on all companies in the supply chain; who’s been absorbing price increases, and who’s been passing them on?

The same goes for glass companies: there has been a huge push by some of the larger unit manufacturers to push down the price of glazed units, which may encourage some smaller firms to call it a day.

I think between now and the end of Q3 will be an interesting period.