Trust and commitment to suppliers was one of the key themes at the first Timber & Building conference for Fortis, the UK’s newest and biggest building products buyers’ group.

"We want to give suppliers the many benefits of trading with the better known independents in the market and combine that with the volume of a national," Fortis operations director David Hebdon told the audience of 125 members and 305 suppliers in Birmingham. He said Fortis members were looking for suppliers who could offer profit opportunities and help to improve members’ trading volumes, margins and market share.

"We are looking for suppliers to work closely with Fortis members and do promotional work," Mr Hebdon said. In return, Fortis promised effective regular product promotions and payment of rebates and listing fees on time.

Formed last year

Fortis was formed last year by the 30 member companies of the CEMCO building group and eight members of the Combined Buying Association (CBA). Their combined turnover is more than £1bn, putting Fortis just behind Travis Perkins and Jewson in the merchant market. The new group began trading in January this year.

Members include Covers Timber and Builders Merchants, Alsford Timber, Ridgeons, Sydenhams, Howarth Timber and Building Supplies, and Howarth Timber Engineered Solutions.

This year, Mr Hebdon told the conference, was about Fortis building a culture with its suppliers, as well as consolidating its supply base.

"It benefits suppliers because it offers a route to market through independent merchants and for members we are negotiating a larger element of turnover which should earn us better terms," he said.

The culture of the two founder organisations was similar and Fortis had a strong ethos "to help each other and support our suppliers".

What differentiated Fortis from other buying groups, he said, was that it was the largest and comprised "like-minded people pulling in the same direction".

National coverage

"We have good national coverage and, although we have some smaller members, we have a predominance of larger companies. We also have a strong regional structure whereas other groups will have smaller independent companies," Mr Mason-Elliott said.

He reiterated Mr Hebdon’s comment that there would be a tight control on the size of Fortis. "If the number of members increased too much we would have difficulty with communication and consensus," he said. "However, we would like to attract some large independents who are not a member of groups, or who are members of other groups."

The bulk of the two-day conference was dedicated to "meet the merchant" meetings, giving suppliers 15-minute slots to talk to potential customers. More than 2,000 individual meetings were held.

"It’s a tremendous opportunity for suppliers to get in front of potential customers, and for merchants to meet suppliers they may have been unaware of," Mr Mason-Elliott said. Timber was an important section for Fortis and it had some strong timber merchant members, he said.

And from timber suppliers, he added, members wanted quality, and clear notification of supply and price changes.

Among timber suppliers that attended the conference were James Jones & Sons and SCA Timber Supply.

Graham Blyth, James Jones senior manager – sales, said the merchant meetings provided an opportunity to talk to "one or two new members that we’re building relationships with".

He added that supply was the main concern expressed by merchants.

"That’s a difference from a year ago when price was the concern," Mr Blyth told TTJ. SCA Timber Supply’s commercial director, Stephen King, agreed that the meetings were worthwhile.

"They’re a very useful business tool and it allows you to tailor your message to the customer," he said

Economic recovery spurs optimism

The UK economy is on the up but it’s still fragile, the Fortis conference was told

Guest speaker David Smith, Sunday Times economics editor, had a "broadly optimistic" message for the Fortis conference and from a show of hands it seemed the audience shared his positive outlook, with the overwhelming majority agreeing there was light at the end of the tunnel.

At the seventh anniversary of the "worst storm" in the global economy, recovery in the UK was starting to take hold – and was sustainable, Mr Smith said.

In 2013 the UK economy performed better than expected; housebuilding began to revive and the Markit/CIPS survey received the strongest response in the survey’s history. "This was a huge relief to the Treasury and the Bank of England. They’ve thrown a lot at the economy but growth was stuck at zero," Mr Smith said.

Added to this, two rating agencies downgraded the UK’s credit rating, and the International Monetary Fund had warned chancellor George Osborne that his austerity measures were playing with fire. However, growth had now returned, "not rip-roaring growth but reasonable growth".

Mr Smith predicted that the Bank of England base rate would remain at 0.5% this year and then would perhaps rise by quarter percentage point increments every three months. Its resting point would be around 2-3% and no higher "for a very long time".

Construction had played a huge role in the economy’s recovery and activity would be sustained for some years, he said. This is backed up by the Construction Products Association forecast of 2.4% growth this year; 5.2% in 2015; 4.4% in 2016; and 3.8% in 2017. The government’s Help to Buy scheme had made a big difference to housebuilding activity and Mr Smith welcomed the extension of its deadline from 2016 to 2020. "A policy that lasts until 2020 might become a permanent feature," he said.

All these factors had contributed to the growth in confidence, among both businesses and consumers.

"One big thing in 2013 was that people stopped fearing the worst," said Mr Smith. "They stopped worrying where the next shoe would drop in the financial crisis and whether the eurozone would break up. There’s still a long way to go in Europe but the fear has gone."

However, some uncertainties remain – the result of Scotland’s referendum on independence in September, and the UK general election next year.

Mr Smith predicted that although there was a strong emotional argument in favour of Scotland’s independence, there would be a "clear vote" to stay in the UK.

"The most serious thing was the currency union decision and that’s left the SNP without a leg to stand on," he said. "The economic argument has dissolved and people will decide it’s safer to stay in the UK."

And as to the result of next year’s general election, Mr Smith predicted another Conservative/Liberal Democrat coalition, with the Lib Dems doing better than current opinion polls indicate. Labour would lose support because of its populist measures which are not welcomed by business, and because of doubts over its economic policies.

Mr Smith ended his presentation with a warning that it was not all plain sailing. There was still a lot of repair work to be done on public finances, the low interest rate reflected the economy’s fragility, and the banking sector "has a long way to go".

And, he added, the UK would never return to the pre-crisis heyday when GDP grew for 16 consecutive quarters.

"We will never see anything like that again," Mr Smith said.