Business Insight 42 – Manufacturing (blog & vlog)

We advertised for salesmen to work in our four showrooms. Getting good candidates who weren’t previously failed, bitter or twisted industry blaggards – or slippery in other ways – was becoming a bit of a problem. The struggle to find quality individuals, who were prepared to risk all by giving up good jobs (like Paul and Bob) and becoming self-employed (and commission only), was increasingly looking like the factor that might hold us back. However, we did get some good ones and by the end of the year we had doubled our turnover, having got over the magic £1 million. That’s an average of £20,000 a week whilst Margaret (bless her) was shutting down great swaths of unproductive UK Plc, mostly in the North of Britain (or other bastions of nationalised industries with their huge unionised and bloated workforces).

We had a few advantages: householders got tax relief on the interest paid on loans for improving houses, and could spread the repayments over 10 years. Frequently, in a period of hyperinflation, the value of these repayments became magically smaller in terms of purchasing power. I used to say to people there was no point in keeping or saving cash when you had 15% inflation, and a monthly repayment of £xx would become what you might pay for a packet of cigarettes in just a few years! This was virtually true in this dark and distant time.

We were becoming an increasingly important customer to our suppliers. In fact, in the industry we knew of no other company, at our size, who did not manufacture for themselves. Virtually every month a rep for a window and door systems company would request an appointment (typically companies like Alcan who designed and ran out the aluminium extrusions that were made into windows and doors). The sales pitch was always the same and pandered to your ego (i.e. more control over quality, better margins, a better sales proposal, something to show off to your potential customers, your own big manufacturing facility, etc. etc.). It was the same with the people who sold the kit to make double glazed sealed units. I just couldn’t see it – I still (and so did everybody else on the firm) believed totally in the Marks & Spencer approach.

The Brighton people that had opened up and bought in products at the same time as us had moved over to making windows for themselves, with a new material called UPVC, in the continental ’tilt and turn’ style; ugly windows that didn’t suit Sussex property. Best of luck to them, we’ll keep buying in fully made bespoke products where we could insist (and did) on the standard of quality, delivery times, best prices and latest technology. Once you had adopted a system to manufacture for yourself, switching to another range of products was very expensive and very unlikely – you were locked in.

We, however, were able easily to switch the bulk of our purchases to another company, and did. The new supplier was called Coastal Aluminium Ltd (CA), a division of a big Plc. We negotiated an entire package for the new year (i.e. replacement showroom samples, salesmen’s hand samples, the vital credit, delivery times, competitive prices for a higher spec product, and exclusivity in our area for their ranges), and all of this was possible because of our buying power.

INSIGHT 42:- We were a sales and fitting organisation, and as I am happy to repeat, the manufacturers that we dealt with only did that (manufacture). They didn’t deal with the general public, only with specifiers, builders or replacement window installation companies such as ours. We had had exponential growth in 30 months of trading this way; having to keep up with it (as our own manufacturer) would have taken even more vital working capital and would have required management resources we didn’t have, plus would have added significantly to our overheads. Buying in was more flexible and allowed for unlimited growth – there were plenty more manufacturers out there wanting volume and a piece of our order book.

Leave a Reply