Last year was the wettest in more than 100 years and, as with the weather, the fencing industry believes business can only get better.
The market is reported as being flat and returns are nothing to cheer about as business is generally last minute and very competitive. Installers are reported to be working further and further from their bases, and investment in manufacturing is limited to necessary replacement or, for the cash-rich, automation and greater efficiency.
"A lot of people were saved last year by the wind in January; it put money into the business when traditionally cash flow is limited. This year that isn’t happening, but we’ve had it tough since 2007 and those of us still here have adjusted to living in harder times," said one supplier.
Another said the storm in January 2012 had helped his company to exceed the year’s target by 15%, but that included 100%-plus in the first quarter, before tailing off at Easter. "This time last year we put on additional shifts and put in our contingency plans to meet demand. We normally have a single shift, which we can ramp up to a double shift, which is fine, but expensive so we’ve looked to smooth our production and put stock on the ground this year and just deal with it," he said.
However, another manufacturer said although the wind blew briefly in November, the sales it provided "have not made us go out and order any more timber". "But it has been so wet that nobody has been doing any garden maintenance so there may be some demand when we get a bit of dry weather."
A supplier added: "The best we can do is to make sure stockists’ shelves are full."
In recent months raw material costs were thought to be rising, and there were fears that competition from large biomass buyers would also add pressure. One harvester said the impact of larger biomass generators was receding and although it was early in the season, he felt roundwood supply was pretty much in balance with demand.
One fencing manufacturer pictured sawmills awash with stock. "You can almost name your price and have it delivered the next day."
Another manufacturer said: "Sawmills are asking for a bit more and there is a slight increase, but for us it’s not been a big issue. We put our prices up on January 1 and we have achieved them. We look at demand and buy in October-November and negotiate the price, and we’ve been generally successful."
Another larger player told a similar story. "Raw material costs have not been particularly noticeable – no more than fuel, transport and other costs. Prices are relatively stable. Contracts are long term and require notice, but we’ve managed a low single-digit increase."
Premature fence post failures
Manufacturers and suppliers continue to grapple with the issue of premature fence post failures. New or improved products and enhanced application protocols are now on the market and one manufacturer was going over exclusively to incised and treated fence posts.
"We have a few posts left – they will go for pallets or some such use – but we are not proposing to involve ourselves with a post that is not properly treated. It will be the new type of sawn posts or incised kiln-dried planed redwood. It might cost a little more but we will be able to sleep soundly in our beds," he said.
He estimated a price premium of 6-10% but, compared with the extended life of the post in the garden and surety of product for contract work, he believed it was worth paying.
Another believed incising and enhanced treatment would become commonplace, although he believes the price premium is both higher and more of an issue. He said the product needs to be regarded as a top-end solution. "Eventually there will be a full range from incised redwood for the highway and specialist standard post, down to un-incised spruce. But that will take time."
Another manufacturer was not so enthusiastic and said end users continuing to buy on price would slow the turnaround. He believed User Class 4 posts would remain just an option alongside a standard softwood product. He also questioned the viability of guarantees.
"Customers like the idea of what’s on offer, but do they have the ability to put that product in stock at a premium price? There also needs to be a certified marking system. How do you make a claim if the post cannot be properly identified other than it had been incised? We believe our customers want a choice – they want that higher specification, but for the core consumer, the issue is price."
Suppliers continue to look at new products to attract business, but many admit that route is limited and it is increasingly difficult to come up with added-value products attractive to hard-pressed buyers.
