Summary
• The market has moved from one extreme to another.
• Working closely with supply chains has proved to be a success.
• Firms are positive in their outlook for 2008.

“This year has been a little bit biblical for the fencing industry.” That’s the view of Nick Carter, sales and marketing director at Grange Fencing Ltd, who likened the shift from shortages to oversupply as “feast and famine for many”.

“Both supplier and stockist alike had run their stocks down after two slow seasons and were unprepared for the surge in demand caused by the storms [in January],” he said. “Then came the war of attrition as everyone fought for the limited supply of fencing material to feed the insatiable demands of the market. And then, just as the raw materials caught up and production was wound up to maximum, the bottom dropped out of the market, leaving many with timber purchased at the top of the price cycle with no-one to sell it to.”

Mr Carter’s comments encapsulate what has been a roller-coaster year for the UK fencing industry. At the turn of April, when the market should have been gearing up for the key Easter period, material prices had risen by as much as 30% and the weather was threatening to ruin sales. “The inclement summer meant that outdoor projects became less prolific, hitting the market at a time when we would normally expect it to be at its most buoyant,” said Will Timmis, Garden Inspirations category manager for Finnforest.

Black market

Such was the state of the market at one point, the Fencing Contractors Association was warning of a black market for fence panels opening up in the West Midlands, with thieves stealing panels, re-treating them and selling them on before following the new owners and stealing them back to start the process again.

However, Martin Cunliffe, product manager at Travis Perkins, said that the reported shortage was more about inflated demand, which was described as “ballistic” in TTJ’s March market report, swallowing up surpluses, rather than a severe lack of materials.

“The timber industry as a whole has gone from a situation of oversupply in recent years to more normal levels,” he said. “It was a normalisation of the market as opposed to an actual shortage.”

Working closely with supply chains proved to be one of the key solutions to helping the market meet the demand of consumers. Nigel Poyner, managing director of M&M Timber Ltd, said that the company had “worked hard over the last six months” to spread its supply net across the UK and Mr Cunliffe noted that Travis Perkins had worked closely with its main supplier to ensure products were available, with production boosted and moves made to increase the efficient use of materials.

Optimistic outlook

Many in the industry are now looking forward to a positive 2008. “The crisis appears to be over,” said Mr Poyner. “We’re quite optimistic about the future. Most sizes of roundwood are now available.”

“2007 was an exceptional year,” added Mr Cunliffe. “We shall be budgeting for growth in 2008 but in line with a normal year’s business.”

Mr Poyner added that material prices were now easing off and returning to normal, and Mr Timmis forecasted they would “remain stable for the first half of 2008”.

However, some are still wary of the lessons learned last winter and are moving to position themselves to cover all eventualities.

Rowlinson Garden Products has issued a warning to stockists and suppliers to start ordering their fencing early ahead of the 2008 season. Paul Taylor, the company’s sales and marketing director, said that while some in the industry had “caught a cold” as a result of the supply-demand situation, there was still a lot of business to come through the market after 2007’s wet summer. He added that many people, particularly those affected by the flooding that hit large parts of the UK, had still to move into their gardens to look at repairing and replacing fencing.

“Last year’s winter storms demonstrated how important it is for customers to get stocks in early to cope with unpredictable demand,” he said.

“Grange and Britannia are now working with their stockists to implement a winter stock build to ensure they will not be caught out again,” added Mr Carter.

And Mr Cunliffe said that Travis Perkins was working towards having “sensible stocks on the floor”, as well as “hoping the weather goes our way”.

Garden improvements

The continued bite of the recent credit crunch and tighter mortgage market would have a noticeable impact on consumer spending power, said Mr Timmis, with high street Christmas sales a good indicator of future moves in the house market and the likely impact this will have on the fencing industry.

“The trend to ‘improve not move’ means that garden makeovers and an interest in exterior design will maintain and probably increase its share of GDP,” said Mr Timmis.

“Likewise for the housebuilding market, which needs to look to other areas where added value will entice potential buyers through the door. Savvy housebuilders who provide beautiful landscaping and additional attention to the outside space – in the form of fencing, decking and outdoor structures – are more likely to impress a design-conscious consumer market.”

Later start

Rowlinson added that the early Easter holiday, with the Bank Holiday weekend falling on March 21-24, would mean that the fencing industry’s peak period would start earlier, although Mr Cunliffe said it was impossible to speculate on the full impact this would have.

And according to Mr Carter, the traditional pattern of post-storm periods is for the market to be flat. This will necessitate the industry to “drive sales ourselves” he said, and would require product and service innovation to invigorate the market.

He highlighted the Louvre Panel range, Flower Walk circular pergola, Madison fence panels and the Octagonal Post, designed to allow fencing lines to be installed at different angles, as examples of products being pushed onto the market by Grange.

Travis Perkins reported a shift towards high-value, lifestyle fencing products, with the company looking to develop trade quality panels for its landscaping clients, while Mr Taylor had earlier said that Rowlinson had turned to a policy of up-selling decorative panels to customers in order to allow them to “fix their fence and give it a new look at the same time”.

Mr Carter noted that in light of the last year’s events, there was no reason for fencing firms to fear being prepared early for the season ahead, even if the market does go flat. “Quite simply, [Grange and Britannia] will exit the season as normal through the Bank Holiday fest. The only difference this year is the peace of mind an earlier stock build will give.”