Are we turning a corner?
By Ryan Johnson, group managing director, Emplas.
It has been a tough start to 2024 but could we be on the brink of an upturn?
The start of this year has delivered exactly what we expected it to – a relatively lack lustre market in the face of still high, if falling inflation, and a stuttering new build sector
That’s contributed to a consensus that the market is probably down around 10 to 16%. That’s far from catastrophic but for those companies that haven’t invested and are perhaps overly reliant on labour, it’s created a definite pressure – and ultimately, vulnerability.
We’ve sustained volumes through a combination of customer growth and customer acquisition. We aren’t, however, immune from wider market trends.
Positively, there are signs that things may be about to improve. House prices in March saw the highest rate of annual inflation for 12-months at 1.7% (Rightmove).
The average asking price was also up 1.1% to £372,324. That’s only £570 short of the record seen in May 2023. The number of sales was also up 13%.
The construction industry has also returned to growth. The latest purchasing managers index compiled by the Chartered Institute of Procurement and Supply recorded a rise to 50.2 from 49.7 last month. This pushed it above the 50-point mark that separates growth from contraction for the first time since August.
Residential housebuilding also strengthened at its quickest pace since November 2022 in the expectation of cuts in the base rate and continuing falls in inflation this year.
As we move forward towards the second half of this year, for my money, the challenges are less about demand, which I believe will increase, and more about the cost of raw materials and labour.
We’ve worked to manage those pressures. We’ve restructured our operations, opening a second manufacturing operation to a new dedicated facility for our door lines; and the space to optimise our pre-core manufacturing facility.
That includes the addition of two new Stuga sawing and machining centres, building on the capacity of our three pre-existing Schirmers and a pre-existing Stuga.
That provides a foundation for sustainable and manageable growth in the second half of this year – and most importantly drives up product quality.
Get the cuts and routs absolutely right, and everything flows better through the factory and ultimately works better for the end-user, further improving product quality.
While representing a substantial up-front investment, it also allows us to automate more process, supporting us in controlling overhead, and ensuring that we remain competitive.
We have brought new agility to the way that we deliver products to our customers. This includes setting new expectations of customer service and support with two-hour delivery slots and 20-minute notifications on arrivals.
We have new product lines in development, which we will announce shortly.
We haven’t stood still because neither has the market. We have built and continue to invest for the future.
We are committed to innovating, introducing new products which support our customers in winning more business and in our service and support offer, so that they can maximise the opportunities that I am confident are on the horizon.