Supply and demand issue exposes potential

Jody Vincent of Emplas discusses with Windows Active his belief that as new-build demand outstrips supply, continuing opportunities exist

As the biggest mis-seller of payment protection insurance and cutting 9,000 jobs in October, Lloyds Banking Group has commanded the headlines for all of the wrong reasons. However, in the autumn, amongst all of the negative coverage, Lloyds made a potentially important announcement for the construction industry and its supply chain. From 2015, Lloyds will make a £50million equity fund available to small house builders to help increase the supply of new homes. The bank said it could also expand the funding and potentially work with investment partners or government schemes.

This is welcome news for the window industry as a supplier to the construction sector – and no doubt a welcome break for Lloyds Chief Executive Antonio Horta Osorio from the round of explanations he has given as to why Lloyds felt it could rip off consumers by selling them insurance they didn’t need – but £50million is a drop in the ocean. What was more significant is Mr Osorio’s analysis that at least 60,000 new homes need to be built in Britain every year above the current level of supply to ease the country’s housing shortage. Last year 120,000 new homes were built in the UK, a 23 per cent increase on the dark days of 2012 and the highest level since 2007.

Demand outstripping supply

But even before the new-build housing sector fell off a cliff in 2008, the rate of construction of new homes was falling far behind the Government’s own target to build 240,000 new homes per year to an average of 100,000. In 2008 it dropped to the lowest peacetime figures since 1924. Meanwhile, figures released in leaked Government documents in the summer warned that this year the number of new homes built in 2014, will have dropped back on by four per cent on the nominal growth reported in 2013. What this means is that it’s being recognised that demand is continuing to outstrip supply going into 2015, and that with the General Election looming on the horizon in May next year, the Government is going to want to do something about it or run the risk of losing votes.

Openings for smaller firms For us as an industry it’s an opportunity. If large public or private housing schemes are out of reach of smaller installers, plenty of opportunities exist with smaller developers – exactly the grouping that are set to benefit from the Lloyds equity fund but which are also now highlighted as having a critical role in meeting future demand. And we have seen our customers start to take advantage of this growth sector, both those already established in it plus retail customers, who through the support offered through our Installer Partnership, have successfully diversified into it. These smaller projects will often be delivered to a higher specification with greater emphasis on quality and the right aesthetic but also performance. We offer one of the industry’s highest performing triple-glazed windows featuring a unit manufactured in Pilkington Optiwhite ‘E’ (outer pane), an argon or krypton gas filling and Pilkington K Glass ‘OW’ (toughened middle and inner pane), plus spacer bar with warm edge option to achieve a installed 0.8W/m²K. u-value. Developers are under pressure across the board to deliver Code for Sustainable Homes Level 4, 5 and 6 properties. Energy efficiency is even more critical in new-build than it is in retail.

Composite door range We have also redefined our composite door range to drive retail but also new-build appeal. This includes 15 classic styles and a range of contemporary designs. We also offer heritage colours for example Chartwell, duck egg and ice cream, through to a host of specialist finishes that have been selected to support our customers winning business in rapidly changing retail and new-build environments. The specialists are already there servicing the high-volume low-margin sector of the market, but there is far greater fluidity in smaller, higher quality specification and as a consequence, higher value regional developer and private new-build sectors. As always, accessing it is about relationships but also the quality and breadth of product offering. Now is the time to get on the phone to higher-end, regional builders and architects and equally if you don’t have the right product range, or you’re not getting the support to enter new markets, a new supplier.

Tel: 01933 674880