Economic and market research reports usually give a few pointers as to market direction, so it is good news for the joinery market that most recent publications paint a largely optimistic picture for prospects ahead.
The latest Markit/CIPS UK construction PMI showed housebuilding was the best performing part of the industry in September with the strongest growth for 12 months, as some companies reported a boost from new developments getting underway after delays earlier in the year.
There had been reports of construction companies putting off projects before the general election in May as they awaited news on any potential tax and planning changes.
"Residential building saw the most decisive momentum shift in September, hitting a one year high in the process, while commercial development also picked up speed as rising business investment and improving UK economic conditions acted to bolster demand," said Tim Moore, Markit senior economist.
The latest Palmer Market Research report – The Window, Door and Conservatory Markets in Housing 2015 Edition – has some interesting highlights, with Palmer saying that PVCu’s overall market share continues to decrease, and is expected to reduce further, from 62% (by installed value) in 2014 to 58% in 2019, as composites, wood and aluminium products grow their share.
Palmer says conservatories (15% increase forecast by 2019 compared to 2014) and bi-fold doors are strong areas for growth apparently driven by the fashion for "family room" type extensions.
But overall, Palmer says its new forecast, compared to the 2014 report, predicts more sluggish growth with the installed value of the market growing by around 5% up to 2019 – a far cry from the 20% 2014-2018 growth forecast last year.
The window market is forecast to contract over the years to 2019, and growth in entrance doors will be "marginal at best", while the new housing glazing market will see continuing, albeit slower growth.
Meanwhile, key points from the British Woodworking Federation’s most recent Joinery State of Trade Survey (Q2) demonstrated manufacturer confidence – with a balance of 60% predicting an increase in business for Q3 2015, and a balance of 64% predicting an increase over the next year.
Some 55% of respondents noted an order book between 1 and 3 months, with 30% of respondents reporting an order book extending beyond 3 months.
More than half were looking to increase their workforce over the next year, while concerns exist about raw material cost inflation.
Another barometer – investment, looks favourable. Some 54% of respondents on balance were planning to boost manufacturing equipment spending with 63% having increased spending over the previous year.
The BWF is currently conducting its Q3 State of Trade Survey.
Demand improvement
"There has been a pick up in demand across the market," one large joinery company contact told TTJ.
The only sector that has been a bit slow is the high-end residential market with housing transactions stifled because of the high level of stamp duty."
But the contact reported that large house refurbishment work was healthy as people opted to improve rather than move.
He also reported demand for timber windows from professionals like doctors, nurses and schoolteachers, while joinery product sales to merchants were also reportedly at a good level.
"We have also been asked to do some large contracts to refurbish large hotels, including one on the west coast of Scotland." "By value we are increasing market share [for timber windows]. The evidence is enquiry levels are increasing and the general state of demand is strong for most people."
Another contact in the staircase manufacturing sector told TTJ that it has seen good growth in the commercial sector. The company supplies the general market for staircases, including self-build sector, the commercial sector, loft extension stairs and the refurbishment market.
"The shift is going more towards the commercial sector," the contact said. One complication of more timber stairs going into this sector is sometimes an issue with longer lengths required.
Contractors passing the buck to suppliers and paying late were flagged up as problems.
"Contractors are looking to us to take responsibility for structural matters and are expecting us to have professional indemnity insurance," the contact added. "The builder is passing the buck down the line."
The contact said builders often tried to take advantage of what was sometimes a "grey area" in projects.
One potential contract for a £1,200 standard softwood staircase in central London was too much hassle for the company, so it decided not to supply the project.
"We have a major problem with contractor retentions still. The building trade does not change, they are quite crafty."
Meanwhile, the contact also complained that end-users were often wanting to take control of stair projects "because they are paying for it" regardless of whether they have any knowledge or not. "They dictate everything and it can cause a lot of problems."
The company had also seen many "crazy" drawings from architects which have no bearing on reality. "They have some vain idea that the company will build the stairs on site."
Pre-finishing of stairs was flagged up as becoming more frequent, with demands for specific finishes, though it isn’t always straight forward, especially with the resurgence of limed oak finishes which requires finishing in component form due to the wire wooling necessary.
"We usually look at August as a slow month but this year it was completely the opposite and was busy. However, the September to Christmas busy period has not built up yet."
Both main political parties in England have recently been talking up the housing market, with the prime minister promising to create "generation buy", by introducing incentives for developers to build more starter homes for purchase (rather than rent), while Labour leader Jeremy Corbyn wants to build 100,000 council and housing association homes per year.
Though it remains to be seen what actual progress will be made on the government’s housing targets, construction output is anticipated to rise a further 4.2% in 2016 driven by private housing, commercial and infrastructure with a boost over the long term from increasing public sector work on schools and hospitals.
One of the main causes of concern in the joinery industry is the ability of joinery companies to attract and pay for skilled labour in a growing market.
Iain McIlwee, chief executive of the British Woodworking Federation, said this was an important issue with one-third of all construction apprentices in woodworking. Some uncertainty still existed about the Apprenticeshp Levy, he added.
"But the market is pretty good at the moment. Over the last few years a lot of members have seen double-digit growth and it seems to be maintaining momentum.
"There was a bit of a general dip in August and it’s difficult to say why that was, maybe because people went on holiday because they had the confidence to go away. But September has come back strong.
"The sector is still pushing on and is still looking at double digit growth in terms of new housing starts in 2016. That’s good for staircases."
Mr McIlwee said Palmer’s latest report showed a positive long-term trend for timber doors and windows, with aluminium-clad timber windows proving popular.
He too reported good growth in the commercial sector, while also citing a move towards certification for fire doors – an area the BWF has done much promotional work on.
He pointed to positive evidence that austerity is hitting customers’ operational budgets rather than capital expenditure, though there is concern in the social housing sector that capital budgets of Housing Associations are under pressure following budget announcements.
"We would hope to see a real increase in public and social housing. We have to drive growth in the housing market." Crucial to this, the BWF believes, is getting more small builders building.
"If you look at timber windows, they do well in the smaller housebuilders market. There is more choice and more bespoke products."
"RMI is hotting up," he added. "People seem to be confident and are getting round to those upgrades."
He also cited furniture as a highlight in recent retail purchasing research, while the "stable" retail sector (shopfitting) may see consumer-spending pull through some growth.
Mr McIlwee reported that current insolvency levels were normal in the woodworking industry and that many businesses were expanding, citing recent factory investments by Mumford & Wood and AJB Group.
"We seem to be positive about the next period, albeit there are some pressures on costs."
