Capital spending is generally a good barometer for the state and outlook of an industry. That spells a mixed picture for the UK joinery sector.
One leading producer described the industry’s mood as “cautiously confident”. Others, while recognising challenges, also identified new market opportunities, the result of changing consumer taste, new technologies, materials and construction developments, such as ‘intelligent housing’ and offsite manufacture.
However, in terms of investment levels, machinery suppliers report wide market variation.
“There’s been investment at smaller companies, but in the medium to large sector it’s one of the quietest periods I’ve known,” said Weinig UK managing director Malcolm Cuthbertson.
Individual machines, moulders, cross-cuts and CNC routers have been selling, he added, but there’s been little spending on “sophisticated integrated” production lines.
“I think manufacturers are dreaming of greater automation and reduced manning levels, with ‘batch size 1’ window machines but there seems to be a lack of confidence in the immediate future,” said Mr Cuthbertson.
“The investment outlook should be positive, but lack of past spending by medium and larger companies has resulted in lower profitability, reducing capital investment and hence productivity.
Manufacturers need to take the plunge into modern, technically advanced [machinery] like advanced ‘batch 1’ window centres. If they don’t, smaller regional joinery companies, which have invested, will take market share.”
SCM Group UK managing director Gabriele de Col also acknowledged market uncertainty. However, he also reported some joiners exploring new manufacturing directions, investing in technology that not only boosts productivity but that increases yield, precision and flexibility.
“Describing the market as buoyant in the shadow of Brexit would be an exaggeration, but many manufacturers’ report good order books and there have been a number of large investments in CNC machining centres,” said Mr de Col.
“One factor here is the return of more custom production of doors and windows to the UK, as time-to-market is now key. Another is the Grenfell effect driving door production to meet stringent fire controls.
Overall, upgrading equipment is achieving higher productivity on higher spec products, while compressing prices.”
For larger producers, he added, the main investment focus has been on output, flexibility and capacity to interface with more complex enterprise resource planning systems.
“But smaller players are also realising they can reach sizeable market niches by investing in more versatile, precise, easily programmable technology that reduces costs,” said Mr de Col.
Meanwhile, the British Woodworking Federation’s quarter two State of Trade Survey also seems on balance to convey that mood of “cautious confidence”. Around 52% of respondents said they had one- to three-month order books, 15% three- to six months and 13% over six months. Just 13% reported two weeks to a month forward orders and 7% two weeks or less. Demand was expected to be the main sales constraint in the coming year, but 20% of respondents anticipated working at over 90% capacity, against 10% in the last year. Over half planned capital investment and 60% product development spending.
Chairman Roy Wakeman said the Performance Timber Products Group (PTPG), which includes Dale Windows, Mumford & Wood (M&W) and TimberWindows.com, had a rolling investment budget of £300,000- £400,000 a year. But he also acknowledged contrasting market dynamics.
While still facing a “battle royal” with uPVC suppliers, Dale, which services merchants and new build, had hit “new sales heights”, with the housing market assisted by government help-to-buy programmes.
However top-end producer M&W had faced more challenging market conditions.
“Its market has been hit by the stamp duty rise and, particularly, difficulties in the London property sector, although refurbishment business in the capital has been good. Brexit fears also seem to have affected big-ticket items worse, as seen in car sales.”
PTPG companies hedge against timber price inflation with long-term supply deals. But Mr Wakeman felt more rises were in the pipeline, adding that post-Brexit vote currency fluctuation made budgeting more difficult.
JELD-WEN senior product manager Tony Pell agreed the key fallout from Brexit was greater market hesitancy.
“Increased caution means consumers take longer making purchase decisions, so demand is more uneven. There’s work in RMI and we’re finding new build pretty strong but some sectors are just more stop-start,” he said. “As some continental Europe markets are flat, their producers are also targeting the UK.”
A positive trend, he added, was in sales of door sets rather than just slabs, particularly to new build. The focus post-Grenfell on fire door safety should also be a timber joinery opportunity, with the government inquiry spotlight particularly on composite products. Timber price rises, he added, have to be absorbed “as we’re all in the same boat”. “However, there’s a feeling some suppliers are using Brexit as an excuse to push through bigger rises,” he said.
JELD-WEN now uses relatively little solid timber, largely favouring more predictable, higher yield finger-jointed, laminated material and components, although Mr Pell said supply of engineered softwood had been tighter recently. “It seems suppliers are getting more value for it in other markets,” he said.
The company has also looked at modified timber but although producers are increasing capacity, there’s concern for volume manufacturers such as JELD-WEN about getting guaranteed availability in the required quantities, according to Mr Pell.
A lead supplier of components to the door and staircase sector expressed optimism in its market, with customers requiring ever more finished products to streamline production processes. He also found them “tolerant” of timber cost-induced price rises. “The industry is facing increases in most materials,” he said. “When I recently asked a customer for a 7% rise due to wood prices they said it was acceptable relative to rises in MDF, OSB and adhesive.”
Sean Parnaby managing director at window and door specialist West Port said business in Q2 was a marked improvement on weather-hit Q1, although this was construction customers “playing catch up rather than inherent market growth”. However, he remained bullish about prospects for increasing timber share of the wider market.
“It’s been increasing particularly in windows for two years,” he said. “It’s partly people coming back to timber, partly the marketing work of the BWF and Wood Window Alliance. But it’s also down to industry advances. We’re no longer just bench joiners, we’re modern manufacturers using efficient, optimising technology that enables us to compete better on price and provide a product range consumers can’t get in uPVC.”
Mr Parnaby agreed that post-Grenfell regulatory reform, the government focus on composite doors and fire testing both door faces, offered major potential to joinery.
“This requires significant investment by competitor material producers, but in timber we’ve already made it,” he said.
It was vital too to be transparent on fire resistance, he said, with West Port now showing its testing on YouTube.
Additionally, said Mr Parnaby, the joinery sector had to keep pace with developments in offsite construction.
“Alongside other Wood Window Alliance members, West Port is currently working with an offsite producer with planned capacity of one unit every 15 minutes,” said Mr Parnaby.
“And we’re talking to concrete and steel frame prefabrication specialists too, probably more so than timber frame.”
The Wood Window Alliance, he added, also saw opportunity in exploiting the well-being attributes of timber in construction while, in the BWF, joinery additionally now had a “potent marketing brand”.
“It’s recognised as the standard setting body and what it’s achieved in quality and performance assurance with its windows and fire door schemes it’s now replicating in its stair scheme.”
Recently appointed BWF acting chief executive Helen Hewitt will make further market comment when results from its live Q3 market survey are in. But she pointed to continuing growth in BWF membership, by 14% this year to over 700, record turnout at its members’ day, strong support for its Fire Door Safety Week and an initial response rate to its latest survey up 30-40% and showing many companies positive about 2019.
“That’s reflected too in our Build it Better with Wood campaign, the foundation of a new branding culture we’re embedding within the industry,” she said. “And Confederation of Timber Industries membership further underlines our commitment to work with the wider timber supply chain.”
The BWF will also monitor post-Grenfell regulatory developments, liaising with government and members to ensure joinery interests are represented.
Continuing commitment to training further highlighted the organisation and its industry’s forward focus, said Ms Hewitt.
“Hopefully I can bring my background working for Proskills and the Mineral Products Qualification Council to bear here,” she said. “The goal is to support the industry in attracting and developing the new talent and leadership it needs for the future.” Mr Parnaby concluded the industry could work together to capitalise on Brexit too.
“Where there are challenges, there are also opportunities. We should gather our thoughts and identify how to exploit them.”
