Fencing manufacturers have been basking in the sun as the British weather finally turned for the better and temperatures soared to record levels. Sales are up but, as the industry is quick to point out, nothing can make up for the terrible spring and Easter, and now it looks as though it’s too much, too late.

"When it is so hot, do you want to sit in the garden or do you want to build a fence around it? You cannot get that spring business back, but certainly trellis has been better than fencing because it is less strenuous than doing a whole fence. Overall, the weather was good, but we are not doing handstands," said one manufacturer.

Another contact added that with the majority of fencing business – about 50% of sales – usually completed by the end of May, the late good weather was a welcome bonus to an otherwise poor year, but the damage was already done.

"Mid-March to mid-June is so important that a good July and August will never make up for a bad April and Easter, and this year it snowed. Business picked up with the weather through to late May, but now it is getting too hot to work. Overall we are ahead of budget for the year, but the amount by which we are ahead is narrowing as the year goes on."

Fears that a sudden burst of fine weather might put pressure on the supply chain appear not to have materialised. However, increased activity in construction has led to competition for fencing and carcassing timber.

"There are adequate supplies," said a contact in the forestry sector. "The mills are fairly busy and there is some competition so they might have to push and jostle each other to get the volume. Most mills cut some fencing and some carcassing, but fencing has been poor and construction grades have been very strong. The majority of mills that concentrate on fencing have been moderately busy all the way through, but it remains to be seen if that will drop."

Prices and costs stable

Prices and costs seem relatively stable. One manufacturer, whose purchasing contracts are nearing their end, said: "We have not noticed sawmills queuing up to put up prices."

Another added that their prices to retailers were also static and discounting to the end user had provided little impact earlier this year to kick-starting the quiet market: "Nationals did not do much discounting, the deals were multi-buys rather than discounts on the headline price, which you expect at this time of year anyway. Home deliveries on internet sales have continued to grow, which gives us an additional outlet. " The fence post failure debate seems to be waning. One contact who supplies incised only as a premium product, said sales of other posts were holding up. Another said: "We only sell incised and kiln-dried redwood. Our sales in volumes have held up, we have not lost a single customer, and we are in discussions to pick up additional business."

Mixed market

Among installers, business remains difficult and what work there is, is competitive and tight on price. "The market is still mixed. The larger contractor is keeping turnover up, but I don’t know how much profit there is. At the microbusiness level as a subcontractor to the bigger operations and doing domestic fencing, the situation is nothing short of hopeless. The mid-range, the SME, is totally mixed. One minute there is not a minute to spare, then at other times the cupboard is bare.

"But one thing that they all have in common and is typical to everyone is there are no lead times. There are no order books, no time for planning for future business. The order is placed today, start tomorrow."

One sector doing well is security fencing, which is forced on the customer by the times in which we live, one contact said. This is good for steel, but one of the major timber consumers, highway fencing is down because there is very little road work being done.

Pallets sector remains tough

longthreatened price increase brought on by higher raw material costs that manufacturers can no longer absorb, TTJ contacts said. The move could not have come at a tougher time as suppliers are already reeling from cutthroat competition and margins shaved to the bone.

"This is very serious because 70% of the cost is the cost of the timber. Where people have been threatening to increase prices, they are now simply going to have to," he said.

The reason for increased timber costs was blamed on the uplift in demand for construction, which is giving sawmills more options as the home-grown timber market is taking more and more market share. While one pallet producer said the key to volumes revolves around the building industry; "they can eat pallets more than anyone else", another said pallet producers for food and beverage and other sectors only have the downside of higher raw material costs from this uplift.

"The surveys show that demand for new pallets is down dramatically – there is less industry, people are buying second-hand, pallets are being recovered, anything to keep down costs," a contact said.

One manufacturer said although raw material prices were up slightly in the third quarter, sales were also up on last year after taking a few accounts on a price basis. "The recent price increase has been difficult. It is £2-3/m³, but this has to be absorbed. If you give someone a chance to look elsewhere, they will."

Another also said business was picking up. "But it is all about price and lead times. There remains an overcapacity in the market so everyone is fighting for a slice of the pie. Margins are definitely lower than this time last year. I am surprised there have not been more failures; perhaps the economy is improving now. We have found it relatively steady in all our customer base."