Glass and Glazing: Southampton
SFP’s recent appointment as Administrators of specialist glass and glazing company Express Glass & Glazing (New Build) Limited, after it faltered due to cashflow difficulties, seems to be symptomatic of wider financial problems in the glass and glazing industry.
The UK glass industry produces an estimated four million tonnes of glass per year, 90 per cent of which is used in the production of containers for the food and drink industry, automotive parts and glazing for use in construction. However, it is these close ties with the construction sector that have seen the recession impacting heavily on the glass and glazing industry, particularly as a result of the consequent collapse of investment in building projects.
As a result it is perhaps hardly surprising that Southampton-based Express Glass & Glazing (New Build) Limited began to show cracks, in spite of its contracts with a number of housing companies including Bellway Homes and an average annual turnover in excess of £4.5 million.
SFP’s Daniel and Simon Plant, both licensed members of the Insolvency Practitioners’ Association, were appointed Joint Administrators on April 12th. This is the second glazing firm case that SFP has been appointed to handle this year, a sign of a sector under pressure, says Simon Plant, Group Parter at SFP: “The construction industry has been severely hit by the economic downturn, and Express Glass & Glazing’s problems seem to have occurred as a direct result.”
Demand for glass and glazing services is to a large extent dictated by the performance of the building market. In the five years leading up to 2011, the value of non-residential building construction declined by an average 4.9 per cent per annum and the building industry saw an 11.1 per cent slump in office construction, the principal market for glass cladding and curtain wall designs.
While there is hope on the horizon, with areas such as public non-housing projects managing to weather the storm better than others, given the scale of the public sector deficit and cuts in areas like local council housing funding, this barren period is likely to sustain before the building environment fully recovers.
The private sector too has suffered. With people tightening purse-strings in unsure financial territory, the areas of property investment is increasingly looking like a luxury many cannot afford.
The industry’s response has been to restructure and diversify where possible, but for smaller construction companies and other associated businesses, competitive reinvention has not always been a viable option. In the same five year period prior to 2011, the value of total housing construction diminished by an average 6.3 per cent per annum, bringing the number of new housing builds down by 13.2 per cent per annum to its lowest level for many years.
While many are working hard to maintain cash flow and focus on the pressing concerns of new business, it is easy for priorities to become blurred and for companies to overlook standard good practices such as setting savings aside for required tax payments.
