Invest for tomorrow, not today

Mark Mitchell
Mark Mitchell

Don’t expect sunlit uplands as we head towards 2024, warns Cornwall Group’s chairman Mark Mitchell, but you can get match fit for when the opportunities arise.

One likely event in 2024 is the General Election. It could be held as late as January 28, 2025 (Parliament cannot dissolve any later than December 17, 2024) but both the spring and autumn of next year have been touted as likely times when the country will head to the polls.

This, argues Cornwall Group’s chairman Mark Mitchell, will have a significant effect on the economy and market for glass in the UK.

“Pressures have definitely eased in recent months,” says Mark. “But no-one is smashing any records – the market is still bumping downwards, and there is little on the horizon to give you confidence that things will improve during 2024.

“And the fact that we should have a General Election within the year means that we are unlikely to get the tax breaks and other incentives from the government to invest in infrastructure.

“And don’t forget the other pressures on business: corporation tax is going up to 25%; the cost of borrowing has tripled in the last 15 months; and the cost of labour continues to rise.

“With this in mind, and given that glass prices are still unstable, I would say that we should expect to see a flat 2024, with nothing really promising until at least 2025, if not 2026.”

Glass prices, according to Mark, are still causing headaches up and down the supply chain. Specifically, while energy prices have dropped since the highs of earlier in the year, UK glass manufacturers are still attempting to maintain a healthy profitable margin as oil prices edge towards $100/barrel.

This position is supported by European glass manufacturers – those in Germany, in particular, have been attempting to effect 10%-15% price rises.

But this is gaining little traction with glass processing companies in the UK because there is still a glut of cheap glass on the market, especially from China, Turkey and Russia (via hidden routes), according to Mark.

“The market may not be as volatile as the start of 2023, but there are still significant pressures,” Mark says. “Oil is up 30% in the last four months, which feeds through to higher fuel, gas and electricity prices, and inflation is still high – even though it is starting to fall. UK glass manufacturers in particular are feeling the pinch, especially as the temptation is there for glass companies to go for the many spot deals that are becoming available.”

Mark says that the companies within the Cornwall Group – Mackenzie Glass, Cornwall Manufacturing, and commercial glazing and retail arm Cornwall Glass & Glazing – avoids this type of procurement because it doesn’t support the long-term health of the industry.

“We build partnerships with our suppliers, in the same way we build partnerships with our customers,” Mark says. “We look for the complete package, which promotes continuity and sustainability. This means we typically buy strategically, not ad hoc.

“This approach also allows us to invest for the long term, so we look beyond the immediate pressures of the next 18 months to three years, and invest for the future. Many people – including homeowners and investors – will be reluctant to invest while property prices continue to drop. But once the market picks up, we’ll be in a much better position than other glass companies to supply high value products to a growing market.”

Cornwall Group has committed to spending £20 million over the next two years (the period that Mark expects to be flat at best) in property, machinery, vehicles and IT.

New machinery includes a new IGU line and heat soaker for oversize units at Plymouth, new IT systems across all Cornwall Glass & Glazing branches, along with a brand new eight-strong fleet of transit vans. And Mackenzie Glass has added a fourth new Hiab crane to its specialist fleet of glass-carrying vehicles.

“The markets are notoriously wobbly in an election year,” Mark says. “And if the chancellor gives anything away in his pre-election budget, it will likely go to homeowners – we just have to hope that this feeds through to home improvement and increased demand for glass.

“But that aside, sensible planning now should put you in a good position to capitalise on those opportunities once the market picks up again.”