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Successful Partnering for Serious Partners

Sponsored by System10 this survey is the fourth in a series of Quarterly Trends Reports on the public sector window and door market.

Sales to Local Authorities

Window fabricators sold more to Local Authorities in May to July 2004 compared with the previous quarter. A net* 18% of fabricators reported growth. Sales were also ahead compared with the same time last year with a net 29% of fabricators improving sales (chart 1). Medium sized and large fabricators improved most. Small companies saw no change. A net 40% of fabricators in Scotland reported the most widespread increases, but companies in the Midlands (33%) and the North and South (25%) were not far behind.

*The difference between the number of companies reporting an increase over those reporting a decrease is the net balance, expressed as a percentage. A positive net balance indicates growth, a net balance of zero implies little has changed.

Sales to Housing Associations

Fabricators say sales to housing associations were also up quarter-on-quarter and year-on-year (12% and 21% respectively) over the three months May to July. Again medium sized and large fabricators did better than smaller firms.

Compared with the same three months of last year, more fabricators in the South (29%) and the North (25%) saw increases, compared with the Midlands (14%) and Scotland, where there was no change.

Outlook: Local Authorities

A net 3% of fabricators expect to improve window and doors sales to Local Authorities in August to October compared with the previous three months. Firms of all sizes expect to sell more except for a net -22% of those employing between 20-49 employees who say sales will drop.

Compared with the same time last year forecasts are robust with a 29% expecting to sell more in the next three months (chart 4).

Outlook: Housing Associations

A net 24% of fabricators expect to improve sales to Housing Associations in August to October compared with three months ago. Expectations are high across the board but more large fabricators and those in the Midlands expect to sell more.

Compared with the same time last year a net 36% of fabricators expect to do better in August to October (chart 4). Expectations are strong across the board.


“Partnering means different things to different people and therefore in promoting the concept some confusion has arisen. Gleeson's core ethos towards partnering is teamwork - working together in a non-adversarial arrangement with clients, consultants and stakeholders to achieve a common goal. We also firmly believe that the benefits of a partnering arrangement should not stop with the main contractor so we have formed strategic alliances with a number of key subcontractors and suppliers. At present approximately 85% of our workload has been procured on a Partnering or negotiated basis.

“Any partnering team must be well balanced and motivated by the recognition of individual success, project success and team success. Successful partnerships illustrate how critical it is that everyone accepts traditional contracting roles and perspectives must evolve as the partnership itself develops.”

John Matthews, Business Development Manager, Gleeson Construction Services Limited


Prices

A balance of 6% of fabricators improved Local Authority prices in the last three months. In the next 12 months a net 35% expect to put up their prices to Local Authorities (chart 6). Prices are being pushed up by higher labour and material costs and the knowledge that PVC resin prices in particular are forecast to rise.

A balance of -3% of fabricators actually dropped prices on Housing Association contracts in May to July compared with three months ago. Only large fabricators and firms in the Midlands and the North increased prices. A net 30% of fabricators expect to raise their prices to Housing Associations over the next 12 months (chart 6).

Partnerships

Thirty three percent of the fabricators we spoke to in this survey are involved in partnerships. We asked them what they think of partnering. On a scale of 1-7 where one is very poor and seven is excellent, just over 2 in 5 rate it as five or more. Positive comments from fabricators with formal partnerships in place include: 'more contract security','elimination of unecessary links in the supply chain', 'on time payments', 'it allows you to achieve the best prices' and 'culminates in better, more trusting working relations'.

There were very few negative comments about partnering in this survey, but many fabricators commented they really didn't know anything about it, or had no experience of it.

Size of contract in the last 12 months
LargerSmallerStayed the same
Local Authority18%24%58%
Housing Association29%10%61%

Changes in the size of contracts are split this survey between sales to local authorities and housing associations. A balance of -6% of fabricators reported fewer windows and doors in Local Authority contracts tendered for. But a balance of 19% say their Housing Association contracts have become larger.

Confidence

Confidence is up again this quarter - a net 6% of fabricators are more confident about prospects for public sector windows than they were three months ago. Forecasts are especially upbeat among large fabricators and firms in the Midlands.


“From experience we've learnt that successful partnering depends on several key issues, the most important being that everyone involved has a clear understanding of the objectives and the roles each partner is to play from day one. McCann Homes chooses its partners based on who comes up with the best objectives, but then we all need to work together to take mutual decisions about how to achieve each objective. In essence, partnering is like creating a virtual company, which when done well creates a win: win situation for all partners involved.”
Mr Ed Barnes, Partnering Manager, McCann Homes Ltd, Leighton Buzzard

Overall prospects for the window industry are also up. A net 15% are more confident compared with three months ago.

Most important issues in the next 12 months for fabricators
Health & Safety1st
Skills shortages2nd
Security3rd
Decent Homes Standard4th
Environmental issues5th
Recycling6th

The order of these issues remain unchanged from the last survey.

In contrast specifiers rate the Decent Homes Standard and Health & Safety as equal top.

Problems

Thirty-four percent of fabricators say lack of skilled staff is their single biggest problem, followed by price cutting, mentioned by 26% (chart 10).

REGISTED SOCIAL LANDLORDS/SPECIFIERS

Expectations for housing stock over the next 12 months
IncreaseDecreaseStay the same
Housing Associations75%7%18%
Local Authorities0%100%0%
*Local Authorities continue to divest stock.

Eighty-seven percent of specifiers in this survey have a new build programme. The new build mix is split into 62% houses, 35% flats and 3% bungalows and sheltered accommodation.

The windows that are being installed for new build are 61% PVC-U, 22% softwood, 15% hardwood and 2% aluminium.

Replacement windows installed were 86% PVC-U and 14% softwood.

Most specifiers do not have any problems interfacing with contractors and fabricators. If anything, the only problem mentioned occasionally is deliveries.

Quality of product, reliability and quality workmanship with a focus on customer care rank high on the list of qualities specifiers look for in sub-contractors. Quality of installation as well as reliability can be hard to find.

Comment

“Mike Stevenson, Sales and Marketing Director of System10 who sponsor this survey, comments: “It's interesting that some people still see partnering as a bad thing and a threat to their business or organisation. It's true that partnering is probably the most abused word in construction's vocabulary these days with many people and organisations using the words and phrases associated with it without a clue as to what it is to partner. Similarly there are many businesses that have chosen to ignore partnering and the culture it brings in favour of tried and tested old methods leading to ever decreasing profits because they still compete by the traditional differentiation through price method. A clearly unsustainable strategy.

“It needn't be this way. There are many companies that are thriving at the moment. Particularly companies that have embraced partnering with open arms and open-books for that matter. Continuously improving their knowledge of partnering, sharing the pains and gains with clients and even competitors. System 10 has had a partnering philosophy known as 'In Business Together' as a key part of its strategy for many years. This has helped customers and clients understand partnering, identify that tenants are the customers and so are the key focus for everyone in the supply chain leading to great successes for clients and window fabricator/installers alike.

“Our System 10 developed Partnering Health Check has been developed specifically to identify at what stage in the partnering journey your organisation is at. It's powerful and will objectively highlight a serious action plan to put your organisation up there with the best when it comes to partnering. Retail businesses feeling the heat of the market maturation and looking to switch to the public sector will make little headway without such a tool.”

The Public Sector Survey, a quarterly trends report, is sponsored by System10 and produced by Michael Rigby Associates. It keeps a finger on the public sector's market pulse, and views fabricators' and specifiers' expectations of market movements.

The survey covers a representative sample of 40 window and door fabricators and 60 specifiers. Telephone interviews took place between the 2-8 August 2004 across a balanced spread of size of firm and geographical area. Numbers employed was used as an indication of company size. The categories are small (1-19 employees), medium (25-49), large (50-200) and very large (over 200 employees).

© Michael Rigby Associates 2004. Full report available free: call Pam Fay on 0121 749 3000 or go to www.specifiernewsline.com

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