Joiners seeing workshops get busier, but threats to profitability still remain

The joinery sector has kept up the encouraging sales figures reported in the previous quarter, and is optimistic about a further increase in demand, but all this is set against continuing pressure on margins. These are the findings of the BWF Joinery State of Trade Survey Q4 2013.

BWF Policy Executive Matt Mahony commented on the survey results:

“The previous Joinery State of Trade  survey indicated that workshops were, in general, busy – or at least busier than they have been for a while – the current results for Q4 2013 are  essentially saying more of the same. Sales volumes are increasing, not quite at the same rate as during Q3, but at a promising rate nonetheless.

We also know that companies are using more of their manufacturing capacity and that order books are looking a lot healthier than in the first half of 2013. This is all very encouraging. The industry is also heading to a point where manufacturing capacity and demand are seen as equal constraints on business, whereas previously a lack of demand had been seen as the crucial barrier for output.

“Manufacturers in Greater London and the South East are again doing slightly better than the UK average, and we would urge the government to do more to ensure that all regions of the UK feel the benefits of improved trading conditions.

“One of the downsides is that joinery businesses are seeing continued pressure on their margins and having to put their unit prices up to counterbalance further fuel and energy costs increases. Many respondents were anticipating an additional increase in sales in the first quarter of 2014, but it remains to be seen as to whether the recent severe weather conditions will have had an affect on orders.

“At BWF we are keen that our members can take advantage of any increased demand for their products. In order to help members to trade more profitably, in the last few weeks alone we have launched a marketing toolkit for joinery businesses, improved our U-value calculation service in order to make CE Marking less of a burden for window manufacturers, and pushed for government to take firm and decisive action against the late payment culture which is endemic in the construction industry.”

Key points from the BWF Joinery State of Trade Survey Q4 2013 include:

– A balance of 27% of joinery companies reported an increase in sales volumes, building on the 43% reporting an increase in the previous quarter and following on from two successive quarters (Q1 and Q2 2013)  during which a balance of 7 % of respondents noted a decrease.

– Manufacturers also remained confident that sales volumes would improve in the next quarter, with a balance of 37% predicting an increase, and a balance of 50% predicting an increase over the next year.

– Around two thirds of respondents had been using more than 70% of their manufacturing capacity over Q4 and were anticipating using a similar usage over the next quarter and the next year. This compares to 59% of respondents in Q3 and 40% in Q2.

– 19% of companies reported a current order book of future work extending beyond 3 months, the same proportion as in Q3 and up from 7% in Q2.

– 37% listed demand as a likely constraint on activity, a similar proportion to the previous quarter and down from 63% in Q2.

– Raw material costs increased for 85% of respondents, with fuel and energy costs putting similar inflationary pressure on unit prices.

– Investment in manufacturing equipment and product improvement looked likely to increase over the next year, with a balance of 46% and 63% respectively planning to boost investment.

BWF members can log in and download the complete survey report.