The Government has announced proposals to get UK housebuilders building. We discuss opportunities and challenges in the new build sector.
October was a momentous month for Birmingham, the UK – and in particular, for the new build housing sector and those who supply it, as the Conservative Party conference rolled into town.
Having played host to the window and door industry’s own networking event, PIGs only days before, the city became the centre piece for a series of major policy announcements from Government, which can be expected to have a significant impact on its future and that of the UK’s economic fortunes more broadly.
First-up and giving her first conference speech since assuming the leadership of the Tory Party in the immediate aftermath of the referendum vote to leave the UK, Theresa May, made it clear that the incumbent administration would not compromise on its ambitions and instruction from the British people to introduce new controls on immigration.
In effect drawing a line in the sand, it makes compromise with the EU on the movement of people, not just goods and services more difficult, and the prospects of the UK reaping the benefits of membership of the single European market more remote. The net effect, an immediate devaluation of the pound.
“As an industry, which imports a high percentage of the raw materials used in the extrusion of systems, this has had an immediate impact on prices as a number of systems companies and other importers of materials, have sought to recoup ‘losses’ on the exchange rate”, explains Ryan Johnson, Managing Director, Emplas.
He continues: “But there were also positives to come out of Birmingham last month, some which may have significant ramifications for the new build sector and us as a sector which supplies into it.”
House building, as highlighted by Johnson, is firmly on the Government’s agenda, with infrastructure projects cited by May and ‘co.’ at this year’s conference as a key element in their strategy to offset any decline in the UK’s economic fortunes as it redefines its relationship with Europe.
Speaking at the conference, Sajid Javid, unveiled two funding packages worth billions to housebuilders and a new initiative to build homes on public land and brownfield sites. The Communities Secretary said that he expects the £3billion Home Builders Fund to deliver 225,000 homes as the Government pursues its increasingly ambitious target of building 1million new homes by 2020.
“It’s particularly notable because the funding is aimed at small and medium sized builders”, says Johnson, Emplas.
“This focus on SME’s in part reflects a level of frustration in Government which has criticised big housebuilders for sitting on land banks rather than developing them as they wait for house prices to increase.
“If the scheme gets the take-up that the Government hopes, it makes smaller and medium sized housebuilders a good hunting ground for the window industry, with good volume but also higher value work.”
Javid also announced another initiative to accelerate the construction of new homes on public land, with the Government partnering with private developers to start a further 15,000 homes by the 2020 target date.
Further measures in the forthcoming Housing Bill include proposals to transform abandoned city and town centres, increasing housing density around transport hubs.
“Brexit muddies the waters”, continues Johnson. “The new build housing sector had been tipped for significant and sustained growth through to 2020. With Brexit, some window industry analysts have now revised those forecasts.
“But we would take a view that if the Government delivers against the conference pledges it made in Birmingham, the new build sector and particularly local and regional housebuilders, could be a significant source of growth for our own industry going forward.”
Offered as part of its award winning EVA – Emplas Virtual Assistant – customer support programme, Emplas can help installers already working in, or looking to expand into the new build sector, target prospects. This includes database creation, cleansing and support to deliver targeted campaigns to small builders.
Johnson continues: “Smaller developers and builders can be quite a hard group to identify and target but the returns can be significant. We’ll work with our customers to develop a database, check each entry and then create a campaign.
“We also do a lot of the legwork including ring-rounds and follow-ups and then pass the leads across for our customers to take forward. We have done it for established trade supplier customers but also supported retail focused customers in expanding their offer into trade supply.”
Johnson also points out that the advantage of new build is that it gives installers the opportunity to sell-in a complete product offer. He continues: “You get the chance to sell-in everything from top to bottom, composites, bi-folds, inline sliding doors, it’s not just about a single product type so the potential return per property is much higher.
“With smaller developments the specification is often also much higher, you see far more requests for foiled finishes and the opportunities to sell at a premium are still very much there.”
Launched in April, through EVA Emplas installers can log-on from any PC, laptop, tablet or mobile phone, to access not only a secure quoting and order processing system but also a comprehensive marketing and sales support package.
This includes everything from website builds, to SEO, pay-per-click, accreditations and memberships, through to ‘real world’ support to target segments of the market.
Johnson concludes: “New build won’t be right for everyone, you need to go into it with your eyes open and critically, the right product offer but if the Government is true to the commitments made at the Conservative Party Conference, last month, it’s worth exploration.”