Planning for the worst?

Window Company (Contracts)’ chairman David Thornton considers what the fallout would be for installers if one of the industry’s big players suddenly went out of business, and how they can best protect themselves from that perceived threat – however unlikely it might seem.

In any industry that likes to network as much as ours does, rumours will always circulate both face-to-face and online about the relative health of various fabricators and systems houses. While I’m almost sure that none of those rumours are true, high gearing, over capacity and low margins in PVCU in particular mean that installers can’t afford to discount the prospect altogether.

It’s easy to think that installers are at the end of the supply chain and would simply switch to buying their frames from somebody else. But what if you are already tied into a project using one particular system, or you single source from one single fabricator? If you are a relatively small player, you could find yourself squeezed out in terms of stock availability or priced out if your new supplier couldn’t match the prices you had been paying.

Most vulnerable in my view are all those installers whose brand or business models are closely linked to their supplier. Before you align yourself too directly with one systems house or fabricator, you need to be as sure as you can be that they are rock solid and, in these uncertain times, that’s quite difficult to establish.

From my perspective, the best way to counter the risk is to dual source wherever possible. We’ve been doing this for many years and, while it does involve more work in terms of managing several different suppliers, the advent of online ordering has simplified things massively.

The crucial thing is to build strong relationships with these suppliers as well of course, so that you are alerted to any supply problems before they affect you.

We make it a policy of visiting every single fabricator we deal with before we start buying from them. I think it’s important to see behind the presentation and marketing and meet the people who really make the business tick. I want to talk to them about how they operate, understand how important my business would be to them, have a look around the factory, and, most importantly, meet their finance teams.

We also make sure that we focus on building our own brand and promoting the strengths of our business – rather than that of our fabrication partners. I can see exactly why small businesses want to benefit from the powerful branding being promoted by systems houses, but that can leave you vulnerable to sudden changes over which you have no control. We tell all our customers about the strength and quality of the suppliers we deal with and even arrange factory visits, but that it always secondary to talking about our own strengths.

In terms of pricing, as I see it, this is really only a big issue for installers who are buying right at the bottom end of the market and who feel that they would struggle to match that price elsewhere. For me, that’s too risky a strategy. There will always be suppliers offering rock bottom prices but if their margins are rock bottom as well, then you will always be vulnerable to them leaving you high and dry.

That’s not a business model I want to put my faith in. Ultimately, we all want to be in control of our own destiny.