I was told by a very reliable source just before the FIT Show that all major systems companies were about to announce significant price increases once the show had completed. They were holding back until then as it would have been politically difficult at a time where many were exhibiting there and many of their customers would be visiting too.

Now that the show is over, I put out a tweet to ask if people had been seeing the predicted price increases. These are some of the responses I got:

People aren’t happy. And you can understand why. Last year, the first round of major price increases were blamed on Sterling dropping in value again the Euro and Dollar. Whilst some held on as long as possible, some moved the day after and introduced some crippling price increases. Still, we seemed to have swallowed that.

It did not stop at there however. We have seen wave after wave of increases from all sorts of areas of our industry, this, despite Sterling recovering to some degree, the UK economy not falling through, and other commodity prices remaining stable, if not falling in value. The increases predicted pre-FIT Show are now filtering through the supply chain. You can’t blame people for being unhappy about it.

DGB Business

Too much pressure at the wrong time

There seems to be less of a clear reasoning for each wave of price increases. The fall back reason seems to now be that “costs out of our control” is the culprit. Or, “cost of manufacturing keeps on rising” is another.

It doesn’t add up to me. Costs out of someones control in manufacturing might be the price of oil, the price of fuel, the value of Sterling etc. Oil has traded in the $45-$50 a barrel range for a long while now. Fuel is stable, if not on a slightly lower trajectory. Sterling is steady at the $1.28 mark, give or take a cent or two. All factors that were indeed unstable the day after the EU vote. So these default excuses don’t carry much weight for me.

Regardless, those at the top have to take a much wider view of the market right now. As it stands, home owners appear to be buying windows and doors in quantities which will amount to year on year growth for many by the end of 2017. This is a good thing. And it is happening against a backdrop of rising inflation and stagnant wage growth, meaning less free cash for people to spend. A positive sign that home owners continue to see home improvements as a purchasing priority, at least for now. But with each month those inflation and wage figures go in opposite directions, the bigger the chance that big ticket items like windows and doors become one of those purchases that home owners sit on and think about for a little while longer.

If price rises continue, which for now it looks like they will, there is only so much that can be absorbed, and so these price increases will have to be passed on to the home owner. Even if it’s in small amounts each time. But 2% here, 3% there, they all add up in the space of a few months. We could be in danger of not applying the breaks and creating an environment where our wares become a little to expensive for some. If we all keep raising prices, we’re going to create our own rod for our own back.

Those at the very top, and by the top I mean the glass houses, the pellet producers who sell to syscos and the syscos too, all need to pause, look at their margins and assess if they really need to continue to pass on increases. Not only will further increases put pressure on our sector and force those increases on to home owners. But with each round of increases they look less and less justified, especially as most outside factors remain fairly stable.

You cannot blame Brexit for everything, and I feel like this latest round of price hikes is just taking advantage of the situation.

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