THE MATERIALS DEBATE TAKE PART IN OUR SURVEY

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It’s what players think and do that shape it. By players, I mean the PVC-U and aluminium systems companies and extruders, timber and other materials, fabricators, installers, hardware and software firms, component suppliers, and machinery companies. What they think and do drives and shapes the market.

What about homeowners and end users, don’t they matter? Of course they do, but homeowners can only choose what the industry offers. If the industry doesn’t show them, or makes it hard for them to buy, they’ll order something else. And although external rare events, the so called Black Swans of Covid, war in Ukraine and container ships blocking the Suez canal may knock us sideways, homeowners can only buy what we sell.

This is especially true for the materials windows and doors are made from. In the mid 1980s I was being interviewed for the job of Marketing Director at Zenith, at that time the third largest direct-sell company after Everest and Anglian. When I was interviewed, the factory was buzzing and 80% of products were aluminium. Two months later when I started, I was shocked to see an empty factory with PVC-U windows brought in from Germany. Zenith had matched Anglian in pricing PVC-U at 5% less than aluminium and 350 salespeople had persuaded homeowners to buy the cheaper material. The order book flipped from 80% aluminium to 80% PVC-U within a month and chaos enveloped the factory.

The Materials

PVC-U grew fast in the late 1970s and 80s and in the 90s PVC-U effectively competed with itself. It’s main threat was saturation. Each year it replaced around 3.5% of the total market and by the mid 2000s it would run out of road unless the product offered more, enough to persuade people to replace their replacement windows. PVC-U systems companies and their component partners successfully evolved the product to do it by improving energy efficiency, security, styles, appearance, and colour offering. But the tendency of the whole PVC-U supply chain to price down and focus on the mass market left the door open for upmarket timber and aluminium.

Having led in the 70s and early 1980s, aluminium captured the commercial market leaving the residential windows and doors market to PVC-U at a lower price point. On the domestic side, aluminium looked set in aspic with little notable product development. But then the top end of the market took a liking to upmarket aluminium sliders, and aluminium grew as the premium market grew. Aluminium residential doors and windows followed, recently becoming a staple in premium installers’ showrooms. Premium PVC-U fabricators then added aluminium to boost their growth and profits. Aluminium looks to be on a roll. How far will it go?

With poor design and quality problems, timber was on the backfoot for 30 years and timber was the problem aluminium and PVC-U solved. But in the early 2000s timber reinvented itself as an upmarket, highly desirable, sustainable, engineered timber product that homeowners paid a hefty premium for. But since aluminium expanded its range and PVC-U launched upmarket timber lookalikes it has its work cut out.

Market Concentration

As markets evolve, they concentrate as expectations rise and competition weeds out weaker players. Systems companies compete through their customers who use added product benefits and sharper service to compete more successfully and grow faster than competitors who don’t have those advantages.

When the market is growing rapidly it’s easy to find reasons to delay or skip expensive, time consuming product development and just copy competitors. But the effect is insidious, and a collective groupthink develops within and across companies. Whole markets or parts of a market pursue some developments and ignore others. Often product development dries up because no one else is doing it, or until an outsider steps in to fill the gap.

As systems and products mature, we demand they do more and do it better, and they become more complicated. So the investment to make them racks up and it costs more to stay in the game. It’s a double whammy. Customers demand more to maintain their edge to compete, and the cost of each improvement also rises. Over time better products, quality and service attract and keep more customers who themselves are doing better, and the winning companies get stronger and can more easily afford the higher cost of competing. Meanwhile, less successful companies find it harder to fund the investment to stay in the game and get progressively weaker. Eventually they get taken over, give up or fail.

A successful fabricator once showed me his meticulous annual sales stats from the late 1970s making secondary glazing, to making aluminium in timber frames, then proper aluminium, as he put it, then PVC-U. The remarkable thing he said was that his average order value had remained pretty much the same throughout, but the work and time to make them, and the labour and machinery had gone up substantially. All we needed in the beginning, he said, was a garage, bench, a saw and a crimper. Now I have a factory with lots of people and sophisticated expensive machinery.

The Effect Of Concentration And Competition

In the mid 1990s there were 84 PVC-U systems companies in the UK, 34 of them taking part in our annual Benchmarks research survey. Today there are 12, one of which, Duraflex, just called it a day. Only six are significant players. Just over 70 have been knocked out by competition and 70 sets of fabricators have had to source new systems suppliers. If you were unlucky or chose your systems company carelessly, you’ll have had to up sticks a few times. The effects of these forced changes on fabricators tends to be disruptive and costly.

The numbers of aluminium systems companies currently are estimated at around 87, although less than a third are likely to come to mind. I believe the numbers of aluminium systems companies will concentrate as they have in PVC-U for reasons I’ll explain in a later article.

Fabricators and installers are weakened by not having a material which enables them to compete effectively or held back by a system that lacks a competitive edge, as well as by losing momentum from forced system change. As importantly, fabricators and installers are strengthened by being able to compete in the right place at the right time with a material or system than gives them advantage, opportunity and solutions.

The Debate

The debate is sponsored by Roger Hartshorn, CEO of Garnalex who has commissioned me to consult the industry about window materials and their future. Why? Having built and sold Eurocell, Roger built and sold Liniar, two of the leading PVC-U systems houses before converting to aluminium. He founded Garnalex the vertically integrated aluminium systems house and the Sheerline system. Roger believes in aluminium but, as his track record shows, he is solutions focused and keeps an open mind. He is determined this debate should be open, independent and free of influence.

The industry is at a watershed, and we appear to have moved on from being a polarised market of PVC-U or Aluminium, or Timber, and everyone’s views are important. But where is it going?

The aim is to gather views and comments from all quarters to find out what the industry is using now, what it thinks about materials and their potential, and to hear what it needs now and what it needs in the future.

I’ve been tasked with conducting an independent, objective debate that engages widely and includes as many people, companies and views as possible from all sectors of the industry. Together with our media partners, Glass News and A Window into Aluminium, I’ll be writing a series of six articles and conducting a survey to find out what the industry thinks and report back. We’ll be sharing fresh information, analyses and facts, to stimulate people to think how it affects them and their customers. Using this information, I’ll also update a materials forecast I did in 2019 to stimulate thinking and further debate. The choices players make about where and how to compete and which materials to offer will affect them and their customers profoundly. Apart from the expired 70 PVC-U systems companies, well over 1,000 fabricators called it a day in recent years. Some fabricators gave up manufacturing to install, some just ran out of road. Was that bad luck, lack of foresight or not creating the time to think about the bigger