Looking at fencing market prospects for 2018, it’s probably fair to say it can’t be as bad as 2017, especially on the retail domestic panel front.
Speaking to manufacturers and retailers it’s clear most have had a tough year, with retail sales reported down by most contacts.
But there are brighter spots: contractors’ work in the new build sector has been busy and there are continued signs that consumers are trading up to better quality products.
As we start 2018, there is optimism that it could be a year of more “normal” demand, with early reports that the high winds of Storm Eleanor are creating extra demand. One major builders merchant described 2017 as an “average” year for fencing sales, while a fencing manufacturer and distributor said the DIY and merchant fence panel business had been “tough”.
“We have been behind year-on-year in double-digit terms and that has been overall fencing demand across all channels,” he said. Putting your fi nger on any one reason for this is diffi cult but the absence of any big storms was a common denominator among most contacts.
Because of big demand in 2014-16 to repair storm damage, the state of domestic fencing is as good as it’s been for years. One manufacturer thought what would have been the normal demand in 2017 had effectively pulled forward to that earlier period. “It didn’t happen last year,” said another large fencing producer. “The storms didn’t materialise. The result was a pretty poor year for fence manufacturers.”
“2017 was not a vintage year for fencing,” added a distributing contact. “However, contracts for major housebuilders have been very busy because of the level of housebuilding activity. Retail is not as good, which I think is due to general UK economic reasons.
“Fencing contractors say that October and November were surprisingly good. A lot of that was down to the fair weather. We did not have lots of rain or snow and people were able to stay in their garden for longer into the autumn. They had work right up to December 22.”
In fact, reports of some fencing contractors kicking several builder customers into touch for late payment is a sign that there is enough work for fencing contractors to pick and choose contracts.
Other areas still holding up are decorative fencing and home delivery.
The arrival of Storm Eleanor in the first week of January was greeted like a late Christmas present.
One major producer recorded a big increase in demand in the 24-48 hours after the storm as stockists anticipated fencing projects to repair damage. In just one day order intakes had doubled.
RISING TIMBER PRICES
One thing affecting fencing prices is the high log price in the UK. With some mills reportedly taking out some production because of the inability to get sufficient logs at the right prices, further product price rises are likely. The failure of James Callander, with administrators taking over on January 8, has created uncertainty about supplies. The Forestry Commission softwood sawlog average price per cubic metre overbark felled was ?42.48 in real terms for the six months to September 30, 2017, a 17.3% growth on the same period in 2016.
“We have seen at our own weighbridges those prices escalate even further over the last quarter,” said a mill contact.
The Great Storm of 1987 has been mentioned as a contributing factor – softwood lost in East Anglia and the South would have been reaching maturity now. Add to that cost increases at the start of 2017 and a change in the National Living Wage in April, which will see hourly rates increase from ?7.50 to ?7.83 for workers aged 25 and over and from ?7.05 to ?7.38 for 21-24-year-olds.
So, manufacturers have gone to customers with product price increases.
Regarding timber shortages, one contact was not sure about that, saying it may just be that companies have to pay a high price to secure their raw material.
“It’s all about the sections of the timber. It could be interesting if the parcels of timber do not become available because the big mills do not take it in,” he added.
Big sawmills not cutting as many big sections for carcassing could be problematic, he said.
“If there are storms [and spikes in demand] that will be the test,” he said. However, his company was well stocked for Q1. Another fencing manufacturing contact predicted increased pressure on supply over the next year which will see a rise in timber prices to the public and building sectors. A distributing contact reported fencing prices were due a 6-7% price increase in January. He predicts further rises in March. But even though fencing prices have been going up they are still not at the same level as 2007. “So, I see the first half of 2018 as relatively buoyant,” he said.
He expressed some concern at sawmills’ stock levels. “I asked to see a stocklist at one mill and there was virtually nothing on it.”
INCISING ON THE RISE
Investments at sawmills and decisions by stockists and fencing contractors point to a rise in timber incising, where incisions are mechanically made in posts to help pressure treatment penetrate more effectively (especially for spruce). This is designed to combat early post failure.
One contact told TTJ it had experienced a big product failure with unincised treated posts in a large private decking project. Tests had shown 80% of the posts had failed after a six-year period, although the site was in a wet environment.
In the merchant sector, Travis Perkins has already been selling a totally incised treated timber post offering and this is being followed in 2018 by Buildbase.
Andy Ferguson, forest products director of Buildbase, said the chain had been selling incised treated timber posts for 4-5 years. Recently, 75-80% of the branch network has been supplying the incised product.
It began recommending the products over the last two years, but in 2018 it is effectively mandating them by selling only the incised product. It had been taking a “fit-forpurpose” product message to the branches.
“We have a responsibility to our branches and customers to supply the right product,” said Mr Ferguson.
He said some branch managers had expressed concern that a more expensive incised product would put off customers but he estimated the price premium of incised timber as very modest – as little as 5% – for a 15-year guarantee on its product. And experiments had proved that the chain wasn’t losing post sales as a result.
“It’s really a good story. The warranty is the most important thing,” said Mr Ferguson. A fence panel manufacturer that offers both incised and unincised had found in the past that the trade was not prepared to pay the extra premium for incised posts but it had noticed that incised timber was increasing in the market place.
Another said there was a reluctance in the domestic fencing market to pay for more expensive incised treated posts.
He also had feedback from some garden centre customers about perceived poor aesthetics of the incised product.
Some others have chosen to focus on selling redwood posts, which are more permeable to preservative treatment compared with spruce. “Big sawmills in the UK are predominantly cutting spruce, hence the rise of incising,” one said.
Fencing manufacturer Bond Timber installed an Excalibur incising machine from Tweddle Engineering last April. It is offering a 30-year service life on its incised Gold treated redwood posts. The gold standard treatment is set at double strength standard of UC4 with the timber in the treatment tank for five hours rather than 1.5 hours.
“Incising of hard to treat timber species such as spruce, Douglas fir and larch are now common place and accepted by end users,” said Bond Timber manager Shaun Getson. “Market demand continues to rise as the incising is a visible and tangible valueadding benefit.” Incising technology continues to develop and timber expertise, the incising patterns and preservative choice are key to good penetration and performance.
“Our advice is to always ensure that you specify what the end use of the timber is and clarify your service life expectations. By specifying correctly and talking with the experts you can be assured of a quality and satisfying outcome.”
Bond’s Excalibur incising technology is used with Tanalith preservatives from Lonza.
MARKET AND PRODUCT PROSPECTS
Across the fencing product supply chain there is a general view that business will rebound.
“We’re hoping to get back to 2016 numbers, which was more of a normal year,” said one manufacturer. “Customers have been adding stock on the ground.”
Distributor Taylor Maxwell referenced a big decline in the market for cheap waney-edged panels “without a shadow of a doubt”.
“Closeboard panels are huge now,” it said. It expects fencing business among contractor customers in the new housing sector to continue to be healthy this year. Grange Fencing says it is quite optimistic about market prospects.
The company’s sales and marketing director, Paul Taylor, said its UK distribution hubs at Much Wenlock (for the Midlands and the north) and Harwich (south and southeast) are carrying significant total stocks estimated at around 350,000 panels. In addition, its UK offices have recently moved to a new site just outside Telford and its parent company Stelmet has been investing heavily in its Polish production facilities.
“We believe there is a great opportunity to improve the product in the UK,” he said. Improvements include fully rebated panels and pressure treatment (rather than dip treatment) as standard across the range. The improved, heavier-duty lap panel with slats boxed into the rebated frame for extra strength feature 10% more timber.
“The entry level product is better than ever before,” said Mr Taylor. “I still believe there will be an opportunity for people to trade up but there is still a large market in the entry level product. And we’re trying to get our builders merchant customers to offer a wider range of products, not just the entry level products.” He sees more potential for the home delivery service, with online business now “absolutely massive in our industry”.
