“It is still very competitive out there and it is very much a buyers’ market.” This importer’s view of the UK wood machinery market seems to sum up the general mood in an industry, which has just come through another comparatively flat quarter.
Many firms are struggling to make ends meet, with one contact saying that his order book is full only because he has diversified into finishing sectors other than wood. “Generally trading conditions are delicate to say the least,” he said. “It is not a very good market at the moment and, on the woodworking side particularly, it is quite flat.”
For others, though, the summer has proved very fruitful, with increases in orders and sales. “We are bowling along quite comfortably and we’ve had a very good summer,” confirmed one contributor. “The enquiry level dropped off in August but the orders came in. It is actually a very good time to buy machinery now because we’ve still got high value currency, low interest rates, low unemployment and the housing market is continuing to rise.
“Whether Mr Bush decides to bomb Iraq is about the only uncertainty we have; everyone is complaining about the stock market at the moment but with this sort of stuff flying around, what do you expect?” The contact said he is nevertheless looking forward to good results in the third quarter.
“We tend to do more sales in the second half of the year than we do in the first half but I would say that at this stage of the game we are already ahead of where we would normally expect to be. Christmas last year was absolutely mad because of September 11; we condensed three months sales into the last five weeks before Christmas, which caused a bit of fun. We’re hoping that sales at the back end of this year will be good as well – only a bit more organised.”
Cut-throat market
Another contact claimed that the machinery market is just as “cut-throat” as it has ever been and that the buyer has all the rewards. “There just doesn’t seem to be an end to it,” he said. “There isn’t even spare cash around at the moment for things like advertising because we, and a lot of other people, have to keep a tight rein. I think firms in the machinery industry will be able to survive but not on the sort of fanfare and publicity that used to happen.” With regard to the remainder of the year, he said he could see no encouraging “ray of light” for the industry.
Considering the well-publicised difficulties now faced even by established furniture manufacturers such as Ducal and Parker Knoll, both of which are currently making a loss, it seems there is little prospect of any furniture-driven market recovery for struggling finishing machinery dealers in the near future. “There is no real possibility of a revival when companies like that are in trouble. It is not going to be a buoyant market for quite a while,” predicted the contact.
Keeping things in perspective, there is plenty of anecdotal evidence that these problems are not restricted to the UK industry.
Pressure on agents
One agent said that the tight market is impacting on some machinery manufacturers in the UK and abroad, and that they, in turn, are exerting ever-greater pressure on agents to sell almost at any price. “This sort of situation gives rise to the infamous silly season where prices are concerned,” he said. “Some manufacturers are prepared to live with their agents through the hard times but in many cases, if someone approaches a manufacturer and says ‘I can sell 20 of your machines a year’, the manufacturer will drop his existing agent for nothing. They chop and change agents like there’s no tomorrow.”
A number of people have suggested that the clout wielded by manufacturers may be diminishing, however, and that fundamental changes are gradually taking place in the way the market is structured.
“It is no longer the case but at one point we felt inundated by Continental companies starting up over here,” said a contact. “These companies were forced to do well because that side of the market is like the car industry; they keep pushing cars out and they’ve got to sell them somehow. The big machinery makers have got to turn them out no matter what the price.
“Back in the early 1980s I read in a TTJ article that the type of machinery com-panies operating at that time would not be around in future,” he continued. “It said that the large machinery importers would go and, to a large extent that has happened, the latest proof of which is the demise of Interwood.”
The contact said successful companies in today’s industry are having to become smaller, watch their overheads and become a lot closer to the market to understand what is going on. “The only way independents will survive the future is to be very lean and very keen. There can be no frills. You’ve got to employ a certain number of engineers but there is no need to have lots of reps running around.”
On the subject of business failures, another contact said: “We have seen a number of firms fall by the wayside but they are frequently the ones that were regarded as a bit of a basket case and it was only a matter of time.” The failure of such firms, he added, is not as shocking to the wider industry as the closure of “household name, decently-run companies”.
Composite products
Another contributor gave a possible taste of things to come in the wood machinery market with the news that an increasing number of firms are showing an interest in the wood/plastic composite product his company is championing.
“From our point of view the outlook is increasingly rosy,” he said. “We are in contact with about 70 companies dotted all over Europe. Of those, some are plastics groups but the majority are in fact currently working with wooden products. What they are looking for is an ability to be a bit more diverse and probably compete on a more level playing field with the plastics guys.”
Following a conference on wood/plastic composites in Vienna last May, the contributor said he had been inundated with enquiries from companies more commonly associated with the timber industry. “I don’t think they’ll necessarily go away from their core markets but they recognise that typical building products, such as window frames, door frames, facias, soffits and cladding made of this stuff are really hot at the moment,” he said.
Because this is an extruded material, there are fewer secondary processes involved in creating the final product and therefore less need for woodworking machinery. In the main, processors are likely to require little more in the way of wood machinery than simple routers to cut holes and slots in the product to accommodate hardware. Plus, of course, a finishing line.
Many firms are busy preparing for Woodmex, which takes place on November 17-20, and the WMSA‘s Woodmex Committee is also in full flow, holding regular meetings with interested parties. “We are very much lining up for Woodmex,” said a spokesperson, adding that the level of interest being shown by the industry augurs well for attendance at the show. “The message we are pushing at Woodmex this year is ‘come see, come buy’.”
