July 1, 2020
It feels like an almost daily occurrence – another business goes into administration. From high street names, already struggling pre-Covid, to manufacturers, airlines, restaurants and, of course, construction related companies. Talk of recovery is tempered by the additional factor of a no deal Brexit scenario looming on the horizon and it is arguably the perfect storm for recession. Some economists predict a V shaped recovery where we bounce back quickly and consumers start to regain confidence, companies start up again and the economy doesn’t take too long to recover. Others predict a “W” shaped recovery where we bounce back but quickly fall again with a suboptimal Brexit scenario and recover once we brush ourselves down again. Whichever is the case, if you are trying to move on with your construction projects during such uncertainty, it can be a troubling time.
On a micro basis, the financial stability of an individual business is more important than ever if you are considering spending money with said company. The last thing anyone wants is to place a large order for windows and doors, pay a hefty deposit and the company go bust the next day!
So, should you be worried about the financial stability of your window supplier?
Most companies that fail tend to have:
- Too much borrowing
- Rented premises
- Expensive rented equipment
- Too many people in their workforce with unmanageable redundancy costs
This all means their overheads are so high they are unable to scale back production, something we have all been forced to do with Covid lockdown, as a result they run out of money! For their customers, this means loss of any deposit paid, delays on their projects (particularly costly on commercial jobs), loss of any long-term guarantees and the inability to procure an exact match of additional products in the future.
What makes George Barnsdale more financially secure?
Established in 1884, the company is still owned and managed by the founder’s direct descendants who own the manufacturing and office premises meaning no costly rents to pay. The company has only ever been interested in long term success and sustainability which has allowed:
- Virtually no borrowing and cash in the bank
- No rented equipment
- An aggressive depreciation policy which means our fxed assets are undervalued
- A paid for modern, technologically advanced factory which allows us to produce our products accurately and efficiently
- We have made large investments, all paid for, to reduce energy costs and take care of the environment:
- 100Kw of solar panels
- 300Kw wood boiler
- Automatic controls to reduce electricity
- Most large motors controlled by inverters
All of the above means we are much better placed than many in the fenestration business to deal with financial stress in such unprecedented times.
Stephen Wright, Chairman of George Barnsdale said: “We have always pushed the business to be more innovative and to reinvest in research and development, but this has always been done with financial prudence. Unfortunately, most of our competitors, the larger manufacturers of timber windows and doors have lost a lot of money in recent years and are likely to be really struggling right now.”
Covid has taught us all a lesson in resilience and taking precautions to protect ourselves. As we come out of lockdown and get back to some kind of normality at work and in life generally we should be aware of the increased risks associated; the financial resilience of our suppliers being one of them. Some basic due diligence is more important than ever to insure against becoming a casualty of someone else’s misfortune.