Strong window sales and a healthy outlook for the public sector

System10 is sponsoring a new series of Quarterly Trends Reports on the public sector window and door market. The Quarterly Trend survey keeps a finger on the pulse of the Public Sector market by monitoring news and expectations. The report, published every three months, will cover sales activity, prospects for the market, pricing trends and housing stock movements.

Sales to Local Authorities

A net* 23% of fabricators increased sales to Local Authorities in the last three months compared with the previous three. The bigger the fabricator the more they reported increases.

*The difference between the number of companies reporting an increase over those reporting a decrease is the net balance expressed as a percentage. A positive net balance indicates growth, a net balance of zero implies little has changed.

Compared with the same time last year, just under a net one in three fabricators improved sales. Larger fabricators saw more of the growth. Fabricators in Scotland (43%) are ahead of other regions but the North (33%), the South (29%) and the Midlands (27%) also did well.

Thirty-nine percent of fabricators reported increases of more than 20%.

Sales to Housing Associations

Fabricators' sales to Housing Associations also increased in the three months to October 2003. A net 22% of fabricators we spoke to improved sales.

Year on year, a net 23% of fabricators improved sales to Housing Associations. Fabricators in Scotland (40%) and the South (31%) did better than the Midlands and the North. The more fabricators produced for the public sector the more they grew. Specialisation in the public sector is clearly paying off. Forty-six percent of fabricators recorded improvements of 20% or more.

Outlook: Local Authorities

A net one in five of the fabricators we spoke to expect to sell more windows and doors to Local Authorities in the next three months compared with the previous three. Expectations grow with size of fabricator. Fabricators in all regions expect to increase sales but those in the North lead the way.

Compared with the same time next year a net 15% of fabricators expect to increase sales. Small fabricators expect sales to drop but medium sized companies (17%) and large and very large companies (68%) expect increased activity. Regionally, the South and North (29% and 20%) expect growth. The Midlands expects some slippage (-9%). Scotland forecasts no change.

Outlook: Housing Associations

The outlook for sales to Housing Associations is similar to that of Local Authorities. A net 22% of fabricators expect to improve window and door sales in the next three months compared with the previous three.

Year on year, a net one in four fabricators expect higher sales compared with the same time last year. Expectations grow with the size of fabricator. All regions expect increases except Scotland where no change is forecast.

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“Our company is nearly 20 years old and approximately 80% of our work is for local authorities and housing associations.

“Councils and housing associations have more government money to invest in maintaining housing stock and have a duty to comply with standards. We are looking for open partnerships with these associations.

“We are confident to go down this route because although price is a factor, it's our policy of adhering to a high standard of product and service which allows us to establish a long term relationship with these organisations.”

Mr Mike Cormack, Sales Director
Ergon Profiles Ltd, Aberdeen

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Prices

A net 9% of fabricators increased Local Authority contract prices in the last three months compared with the previous three. Medium sized fabricators (23%) were particularly successful in putting up prices. Fabricators in the South and North also increased prices in contrast to the Midlands where prices eased.

But over the next 12 months a net one in two fabricators expect their prices to Local Authorities to rise.

Overall a net 5% of fabricators achieved improved prices on Housing Association contracts in the last three months compared with the previous three.

A net 43% of fabricators expect the prices at which they sell to Housing Associations to go up in the next 12 months compared with the previous 12 months.

Partnerships

Thirty-four percent of the fabricators we spoke to have formal partnerships in place. Some believe that partnerships will 'provide a better service', 'create closer working relationships' and 'see it as the way forward for the industry'. Fixed prices, are a concern but partnering can be used to help restore sensible pricing. 'Open book accounting', agreeing 'price up front' and 'no hidden extras' are real benefits, as is the 'ability to forecast forwards and organise more'.

Size of contract in the last 12 months

	Larger	Smaller	Stayed the same
Local Authority	31%	16%	53%
Housing Association	29%	15%	56%

Contracts have got bigger. A net 15% of fabricators say the number of windows and doors per Housing Association and Local Authority contract they have tendered for has become larger.

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“The Decent Homes Standards and new legislation will give the reliable, dedicated fabricator the edge. 'Best Value does not mean cheapest.'

“We spent time working out a price structure and work closely with our profile company in order to compete in the market. We have found that contractors are willing to pay that bit extra to secure a reliable partnership.”

Mr A Edmunds, Director
A J Door Systems Ltd, West Bromwich

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Confidence

Prospects for public sector windows show a net 17% of fabricators more confident compared with three months ago. Large and very large fabricators are most upbeat as well as companies in Scotland.

Just over a net one in four fabricators supplying the public sector are more positive overall for the window industry than they were three months ago. The outlook is healthy across the board but large and very large companies are particularly confident. More fabricators in the North are upbeat about the next three months compared with the previous three.

Most important issues in the next 12 months for fabricators

Health & Safety	1st
Skills shortages	2nd
Security	3rd
Environmental issues	4th
Recycling	5th

REGISTED SOCIAL LANDLORDS/SPECIFIERS

Specifiers' expectations, housing stock

We asked Local Authorities and Housing Associations what their expectations are for housing stock over the next 12 months.

	Increase	Decrease	Stay the same
Housing Associations	57%	14%	29%
Local Authorities	0%	84%	16%

Specifiers with a new build housing programme underway say that houses accounted for 53% of dwellings, flats accounted for 42% and bungalows accounted for the remaining 5%.

Specifiers with a replacement window or doors programme in place say that 5% of the windows they replace are aluminium. Hardwood accounts for 8%, softwood for 12% and PVC-U for 75%.

Sixty-seven percent of the materials used for the new build windows are PVC-U. Ten percent is aluminium, 12% hardwood and 11% softwood.

Housing contracts in the last 12 months	Fabrication contracts	Installation contracts
Direct with a DLO	14%	16%
Direct with the fabricator/installer	27%	22%
Arranged through fabricators	59%	62%

Quality, reliability and skilled staff are qualities specifiers look for in a window or door sub-contractor. Lack of skilled staff was the main problem for specifiers.

Comment

“Continued government investment in the public sector means that one third of all construction is now public sector related", says Mike Stevenson, Sales & Marketing Director of leading public sector window system, System10. "And the trend looks likely to continue. A growing market thrives on information, so the time is right to launch the Public Sector Quarterly Trends Survey. Sponsoring the survey reflects System10's continued commitment to growing this market.

“The Decent Homes Standard comes out top of the list for Local Authorities as the most important issue in the next 12 months in this survey. Housing Associations rate it as the second most important issue after Health & Safety. This reflects the Government's decent home target set out in 2000 to ensure all social housing meets the standards of decency by 2010.

“Running alongside the Decency Standards for existing properties is the key issue that Britain requires between 220,000 and 230,000 new dwellings each year to keep up with demand. In 2002, 169,000 houses were built and the year before that 162,000. Some blame house builders for the shortfall, others the Government. The main problem is that private developers haven't filled the gap left by the public sector. More than 400,000 homes were built every year in the 60's. Half of these by local councils. Social housing is once again a recognised priority, and is destined to become even more important to the economy for years to come. The prospects for providers and their private sector partners are looking good”.

The Public Sector Survey, a quarterly trends report, is produced by Michael Rigby Associates and sponsored by System10. The aim is to keep a finger on the public sector's market pulse, and to view fabricators' and specifiers' expectations of market movements. The survey covers a representative sample of 60 window and door fabricators and 40 specifiers. Telephone interviews took place between the 6-21 November 2003 across a balanced spread of size of organisation and geographical area. Numbers employed was used as an indication of company size. The categories are small (1-19 employees), medium (25-49), large (50-200) and very large (over 200 employees). © Michael Rigby Associates 2003. Tel (01453) 521621, www.521621.com