Public sector window sales up on last year

Sponsored by System10 this survey is the third in a series of Quarterly Trends Reports on the public sector window and door market.

Sales to Local Authorities

Window fabricators' sales to Local Authorities eased in February to April 2004 compared with the previous quarter. A net* -8% of fabricators experienced lower sales (chart 1). But compared with the same time last year a net 12% of fabricators improved sales (chart 3). Medium sized and large fabricators improved most. Fabricators in the Midlands were particularly strong. Fabricators who produce more than 125 frames a week for the public sector were ahead of others.

*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.

Sales to Housing Associations

Fabricators saw no change in sales to Housing Associations in February to April compared with three months ago (chart 2).

However, compared with the same time last year, a net 17% of fabricators reported higher sales (chart 3). More large fabricators increased sales to Housing Associations (29%) than medium or small companies.

Outlook: Local Authorities

A net 27% of fabricators expect to improve window and doors sales to Local Authorities in May to July compared with the previous three months. More large fabricators expect to increase sales. All regions expect to sell more except Scotland where fabricators expect sales to ease.

Compared with the same time last year a balance of 16% expect to sell more in the next three months (chart 4). Medium sized fabricators and those in the Midlands are especially positive.

Outlook: Housing Associations

A net 45% of fabricators expect to improve sales to Housing Associations in May to July compared with three months ago. Expectations are high across the board but more large fabricators and those in the Midlands expect to sell more.

Compared with the same time last year a net 28% of fabricators expect to sell more in May to July (chart 4). Medium sized fabricators and those in the North have the highest expectations.

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“We have been involved in formal partnering arrangements for at least the last six years. The benefits include continuity of work, better planning and efficient allocation of resources. Parties are generally brought together and get involved at a much earlier stage, meaning client objectives can be clearly identified and planned for.

“Continuity of work benefits the whole supply chain.”

Mr David Hughes, Partnering Director
Keepmoat Regeneration, Bedfordshire

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Prices

A balance of 16% of fabricators improved Local Authority prices in the last three months compared with the previous three but only small fabricators and those in the Midlands and the North increased prices.

In the next 12 months a net 47% expect to put up their prices to Local Authorities (chart 6). Prices are being pushed up by higher labour and material costs.

A net 7% of fabricators achieved higher prices on Housing Association contracts in February to April compared with three months ago. Small and large fabricators improved but medium sized fabricators saw prices ease. Only the Midlands and the North increased prices.

A balance of 52% of fabricators expect to raise their prices to Housing Associations over the next 12 months (chart 6). Again higher material and labour costs are driving prices.

Partnerships

Twenty percent of the fabricators we spoke to are involved in partnerships. But what do fabricators think of partnerships? On a scale of 1-7 where one is very poor and seven is excellent, fifty-four percent rated it as five or above which is broadly favourable. But the comments on partnering vary from 'continuity of work', fixed pricing structure', 'provides security' to 'the way forward'. Less enthusiastic comments include 'complete waste of time - they always go for the lowest quote so people don't perform well'. Some fabricators simply don't have a view. Most believe partnering can help restore sensible pricing but many are still undecided.

Size of contract in the last 12 months

	Larger	Smaller	Stayed the same
Local Authority	22%	13%	65%
Housing Association	21%	7%	72%

Contracts continue to become bigger. A net 9% of fabricators increased the number of windows and doors for Local Authoritiy contracts tendered for. A balance of 14% say their Housing Association contracts have become larger.

Confidence

Confidence is high this quarter - a net 28% of fabricators are more confident about prospects for public sector windows than they were three months ago (chart 9).

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“The main benefits of partnering for us are continuity of work and an advanced order book.

“Long term partnering will create more efficient contracts which will drive down the costs to local authorities. At the same time greater emphasis is placed on customer care and satisfaction.

“As we are tied into the partnership for a long time, it makes it worthwhile for us to establish offices in the different areas. We can also attract local employees and implement training schemes instead of operating from Head Office which could be many miles away from the contract work.”

Mr Gary Anderson, Director
Baas Construction Ltd, Burnley, Lancashire

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Overall prospects for the window industry are also high. A net 35% are more confident compared with three months ago.

Most important issues in the next 12 months for fabricators

Health & Safety	1st
Skills shortages	2nd
Security	3rd
Decent Homes Standard	4th
Environmental issues	5th
Recycling	6th

The order of these issues remain unchanged from the last survey.

In contrast specifiers rate the Decent Homes Standard and Health & Safety as equal top. This is followed by skills shortages and environmental issues.

Problems

Thirty-eight percent of fabricators say lack of skilled staff is their biggest problem.Twenty percent say they have no problems while 18% mention price cutting as the single biggest problem (chart 10).

REGISTED SOCIAL LANDLORDS/SPECIFIERS

Expectations for housing stock over the next 12 months

	Increase	Decrease	Stay the same
Housing Associations	86%	6%	8%
Local Authorities	0%	*92%	8%

*Local Authorities continue to divest stock. Specifiers with a new build housing programme say that houses accounted for 66% of dwellings, flats for 31%, bungalows, sheltered housing and retirement homes for the remaining 3%.

The windows that are being installed for new build are 1% steel, 3% aluminium, 8% hardwood, 23% softwood and 65% PVC-U.

Replacement windows installed are 4% hardwood, 15% softwood and 81% PVC-U.

Housing contracts in the last 12 months

	Fabrication contracts	Installation contracts
Direct with a DLO	6%	11%
Direct with the fabricator/ Installer	28%	17%
Arranged through contractors	66%	72%

Many specifiers do not have any problems interfacing with contractors and fabricators. But some mention lead times, quality and reliability of subcontractors, getting good installers and late deliveries.

Reliability, quality and good standards are just a few of the qualities specifiers look for in sub-contractors. Quality of product and installation as well as reliability can be hard to find.

Comment

“A recent EU report on the use of PVC-U and other window and door materials concluded that from an environmental position no material is better - or worse - than others”, says Mike Stevenson, Sales and Marketing Director of System10 who sponsor this survey. “It also concluded that PVC-U is not a 'bad material', a case heavily argued by Greenpeace and other anti-PVC-U lobbyists. Scientifically speaking their case is not backed by facts - as has now been proved. But the environment and environmentalists have a big effect on us, continuing to hit headlines. Lobbying groups also continue to pressure the Government to direct industry to clean up its act.

“The benefits of PVC-U are being ignored by some social housing managers - a matter not taken seriously by all PVC-U systems companies. Anyone in the public sector should consider the quality of any anti PVC-U 'evidence' before making up their minds. Environmentally concerned architects wishing to specify PVC-U can now do so with a clear conscience. All windows replaced with System10 products will be recycled at its strategic partner's plant for post-consumer windows - they not only recycle PVC-U, but also timber, aluminium and steel.

“That's not the only thing we're doing for the environment. Our commitment to the Vinyl 2010 agreement, which sets out to collect 50% of post-consumer windows by 2005, is further indication to anyone who ever doubted the benefits of PVC-U. They can be increasingly confident about its environmental credentials”.

The Public Sector Survey, a quarterly trends report, is sponsored by System10 and produced by Michael Rigby Associates. It keeps a finger on the public sector's market pulse, and views fabricators' and specifiers' expectations of market movements. The survey covers a representative sample of 40 window and door fabricators and 60 specifiers. Telephone interviews took place between the 7-19 May 2004 across a balanced spread of size of firm 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 2004. Full report available free: call Pam Fay on 0121 749 3000 or go to www.specifiernewsline.com