How will the Middle East crisis impact your business?

The global backdrop for the UK window and door industry has shifted dramatically in recent weeks as geopolitical events have a direct, measurable impact on the day-to-day reality of fabrication, supply, pricing and installation. So, what do installers need to know?

The conflict between the US and Israel, and Iran is having a massive impact on energy markets, logistics networks and raw material supply and with oil tipping above the $110 mark at the start of this month [April], no one is immune.

That’s pushing up manufacturing and energy costs. It increases operational overheads, gives home owners a reason to invest in energy efficient home improvements and limits their ability to do so all at once by squeezing household incomes.

With so much volatility, how do installers navigate economic waters as turbulent as those of the Hormuz Strait?

“We were hit by a raft of price increases and manufacturing costs at the end of March”, explains Mike Parczuk, Managing Director, Sternfenster. “Systems houses, our glass suppliers, hardware – we’ve seen increases across the board and by as much as 11%.

“That is a direct consequence of the conflict in the Middle East. It’s impacting the price you pay at the pumps for fuel and your energy costs.

“Even with the current ceasefire the impact of disruption to global oil supply and shipping is going to be felt for months to come.

“We can’t change the course of global events but that doesn’t mean that we don’t have a choice about how we move forward.

“We do.”

Supplier to Strategic Partner

Against this backdrop the changing role of the fabricator is accelerating away from supplier to strategic partner, placing emphasis on stability, transparency and long-term thinking.
“When the market becomes unpredictable, the difference between a good supplier and a great one becomes very clear.

It’s about who can keep delivering, who communicates honestly, and who has made the right investments to support their customers when it really matters”, Mike continues.

“The risk of getting this wrong for installers is significant. Supplier instability can lead to missed deliveries, inconsistent quality, and ultimately damage to your reputation with homeowners.
And in a market where margins are already tight, those risks are amplified.”

Mike argues that this is where long-term planning comes into its own. Sternfenster’s investment strategy has been consistent and long-term.

It includes significant capital investment in manufacturing infrastructure, including new automated glass lines and welding technology, alongside ongoing development of digital systems that improve efficiency and reduce errors.

“We can’t control global events,” Mike continues, “but you can control how well your business is set up to deal with them. The investments we’ve made are all about giving our customers that extra layer of protection.

“No supplier is immune to global cost pressures, the approach to managing them can vary significantly – that was something that we saw with Covid.

“Some fabricators switched-off investment plans. That’s made them less able to manage the challenges that we’re facing today.”

Sternfenster’s Action Plan

While Sternfenster’s long-term investment strategy has given it stronger foundations on which to build it has also been proactive in its response to the radically shifting economic landscape.

This includes absorbing costs where it has been viable to do so; challenging supplier increases where those costs have appeared unjustified; investing in supply chain resilience; and communicating openly and regularly with its customers.

“As you might expect, we’ve had some challenging conversations with our suppliers”, continues Mike, “but we should have confidence in our relationships with them and if necessary, have those robust and frank discussions.

“We’ve recognise the impact to the global economy and supply chains but also don’t believe that we or anyone else should try and profiteer from them and we’ve said that.

“We’ve got to a place with our suppliers where we’re collectively feeling the pain and things are as fair as they can be but we will continue to push and challenge if we believe it isn’t.”

Lessons Learnt

As well placing emphasis on the importance of investment, Mike argues that the other important takeaway from the pandemic was the importance of consistency of supply.

“You can’t simply look at Covid and overlay as a roadmap for where we are today”, he says, “but there are clearly some takeaways.

“The most important one of those is that short-term decisions have long-term consequences. Partnerships pay when economic conditions are tough. They deliver reliability and stability to your supply chain.

“There were lots of installers who jumped between suppliers based on price and it came back to haunt them.

“The industry needs to value partnership and loyalty more highly. It delivers greater certainty over supply, it reduces the risk of disruption, protecting your reputation and it gives you access to tools and support.

“When it’s difficult, it provides stability and longer term, a far stronger foundation for growth.”

For more information visit www.sternfenster.com, email sales@sternfenster.co.uk or call 01522 512525