The UK has endured one of the wettest summers but, surprisingly, sales of core products like the fence panel have held up despite the rain, although decorative products have fared less well.
Manufacturers benefited from the need for repair work following the severe storm in January and one major fencing manufacturer told TTJ that his commodity fence panel business was up 80% in the first quarter, with decorative business boosted by 50%.
His second quarter plateaued and was more in line with his 2011 performance on the commodity panel side, and decorative products were slightly down, but for the first half of the year, the company was still 25% ahead of 2011.
"Volumes in August held up; they didn’t fall ff a cliff," he added.
He wondered how much the storm may have pulled forward work planned for 2013, with a possible consequence of a dearth next year.
Another large volume manufacturer said his sales were "bang on budget" every month so far in 2012. Sales for high-value projects and garden improvement work were down, he said, but sales of core products – people replacing damaged fence panels – had increased.
"We’ve found the strength in core product sales has been more than enough to compensate for the poorer sales elsewhere," he said, citing as an example, one of his customers who was ordering more fence panels and fewer arches.
"We wondered earlier in the year whether there would be a ‘tail’ on the storm damage business and it has continued on into August," he said, adding that he was surprised by the trend.
The combination of the Queen’s Jubilee, the European football championships, the Olympics/Paralympics and the delivery restrictions in London during the Games wasn’t a great combination for business, he said, but against the odds his total sales were up about 15% for 2012 to date.
But he wasn’t overly optimistic for 2013 and believed consumers would continue to be careful in spending their money.
Continuing general economic problems were continuing to impact, especially in non-essential purchases.
"The days of strong sales in decorative panels over the past four to five years are a distant memory," one contact said. "People are trading down. The general consumer is looking for value and watching what they’re spending."
Garden centres and other retailers are picking up on the public desire for a good bargain and want more promotional product lines.
Meanwhile, highways fencing work has been affected by cuts in public infrastructure investment.
"I hope the government will pick a few projects and start pushing on with them," said one mill contact.
The mill, which supplies fencing components, described business as fairly flat, with customers not having a lot of confidence.
He reported hearing some big swings in timber prices being quoted by one sawmill, with one of its customers reportedly having its prices hiked by £20/m3 while another had its timber prices slashed by £20/m3.
But the contact does not believe there will be any big timber price increases in the short term.
Competition from biomass industry timber purchasers was not a massive issue in the market currently, he added, but continuing growth in oil prices meant that in five years’ time the situation could be very different.
Another manufacturing contact said a softening in raw material prices earlier in the year was a short respite to the long-term upward trend and he was now going into a period of negotiating prices with suppliers and customers.
On the treatment front, the recent introduction of incised timber products by several large domestic sawmills marks a major step in the industry seeking to address problems of premature fence post failures.
One contact said marketing was absolutely critical in pushing incised timber, as was thirdparty certification and use of marking which would enable the product to be traced, effectively protecting manufacturers.
"If you get those things right then the market will pay the premium," he said.
