Last man standing

20 years ago there were more than 80
systems companies to choose from.
Where did they all go? Many crept away quietly.
Some sold at the peak, leaving the buyers to
figure out how to make their purchase pay.
Some left it too late, and got sold by the
administrator for a song. A few went down in
flames. A series of mergers, acquisitions and
failures has left just a dozen full systems
companies in the UK: Rehau, Synseal,
Duraflex, Spectus, Deceuninck, Veka,
Eurocell, WHS Halo, Profile 22, LB,
Selecta and a new arrival, Liniar.

One of these is forecast to stop extruding in
the UK within a year as costs of raw materials,
energy and transport rise and competition
increases. Another is expected to be sold;
two more are in talks about a sale.
One is suffering terrible losses, sustainable
only for those with the deepest of pockets
and their heads furthest in the sand.

Two are metamorphosing into systems-fabricator hybrids. That leaves three full
systems companies who look like being around as systems companies for the
duration. The market will support less than six serious systems companies and
niche players. As the big get bigger, and the market shrinks, there is no room
for more. When the music stops there will be fewer chairs to sit on.

Systems-fabricators: Cross dressing is less fun for customers

One systems company, a systems-fabricator, is now more super-fabricator than
systems-company. Fabricator customers have to be pretty good to compete with
their suppliers. A few are. But others are persuaded to jack it in and buy frames
not profile - or the gloves come off. There is no place for the independent fabricator
in this systems-fabricator's long term future.

A fig leaf for your doors

Some systems companies have always had downstream fabrication, usually to
support their customers. But two systems companies, attracted by the added value
and margin, are moving downstream with composite doors to compete with their
customers. Is it a coincidence that their profile sales are falling?
Their fabricators aren't happy, because it undermines their role and appropriates
the growth areas and better margin business for the systems-fabricator.
But it's hard for most independent fabricators to match the systems-fabricator's
investment in automation, facilities and purchasing power.
It's also hard for fabricators to draw a line in the sand and say this side of the line
is mine. The line has been fudged so extensively in the last two years that it's almost
impossible to turn the clock back. If your supplier broadcasts the price you should
sell at and offers to deliver to you, your customers or your customers' customers,
and anyone can order online, only you can know if that supports or undermines you.

Only you can tell if they are helping you compete more effectively, or are competing
with you. Some companies or window groups started as installers and fabricators
and only later moved upstream to become systems companies. Occasionally they
tread on customers' toes, but everyone knows the rules of engagement that limit
conflict. Fabricators who sign up with them do so with their eyes open. Creating a
different brand, or a different company, however, to provide a fig leaf to cover the
conflict caused by a systems company moving in on its customers is different.

There's nothing friendly about Blue on Blue
If you saw it coming and didn't shout stop, you need to move on, however aggrieved you feel. Your suppliers are acting in their own best interests, not yours. In military parlance civilian casualties are collateral damage, but competing with your customer, or increasingly with your customers' customer is called friendly fire, or blue on blue, chirpy little phrases for the ultimate betrayal. Partner or Prey? Ten years ago the market was growing fast and there was room for all. Now it's consolidating and your supplier may not be among the survivors. Or they may be morphing into a bigger, better capitalised and aggressive competitor. Instead of being a partner, your supplier's relationship with you may have changed without you realising it. You, your customers, or your customers' customers, may have just become prey, food to help your supplier grow. Every systems company's future is different, so it's worth taking a long cool look at yours. Not every systems company is a potential casualty, or a threat.	The Spectus vertical slider - a great diversification product for fabricators
Spectus is growing, in the UK and overseas. It's independent and financially solid, part of the Latium group. We are a systems company and plan to stay one. If you are a fabricator and plan to stay one, feel free to call me about your future.