Peter Johnson, Chairman of non-combustible cladding supplier Vivalda Group, reflects on a challenging year for the facades market.
Having got to grips with the three biggest strategic challenges we’d ever faced in 2019 – the construction recession, Brexit and the post-Grenfell fall-out – we thought things could only get better in 2020.
Sadly, it was not to be. If we thought these choppy waters were bad enough, cue the arrival of Covid-19 and the lockdown affecting just about every construction site from the end of March.
While no one could ever say it’s been easy, the challenges posed by the virus have brought out the best in people, such as our nine UK branches using Zoom and Teams technology to stay in touch with customers, maintaining the flow of cladding to site.
Thankfully, our sector has not been as badly affected by lockdown measures as others within UK plc. Certainly, the Government’s remediation fund of £1.6 billion has helped support the cladding sector, while ongoing public finance initiatives have helped us, not only to keep the tills ringing, but also to put us in with a fighting chance of achieving record sales for the full year.
We also salute construction industry leaders such as main contractors and the merchant sector for maintaining prompt payment terms, enabling liquidity to flow through the supply chain. In each of the previous three major recessions I’ve experienced, the industry’s first reaction has been to put the cheque book in the safe and throw away the key. Not this time though.
As lockdown happened, we budgeted for about only 30% of our bills being paid on the due date. However, in reality that figure was much higher - far closer to payment patterns we would see in normal trading conditions.
As well as main contractors and merchants, our customers should be recognised for their more open, collaborative attitude during these tough times. In turn we maintained business-as-usual payments to our suppliers, a strategic decision to generate both goodwill and creditor confidence.
Too often lambasted for passing the financial pain down the line, the building trade deserves recognition for its positive response during the epidemic. From our perspective all of the big players have kept supply-chain cash flowing, which has proved vital for the smooth running of major projects.
When we see clear evidence of payments systems fully operational throughout lockdown and a willingness to settle invoices when they fall due, we need to tell the world there’s no shortage of true professionalism and decency in the UK construction industry.
Looking towards 2021, despite the second lockdown, we are upbeat about the future. It’s likely that the Government’s post-Covid economic strategy will involve significant infrastructure investment, including schools, hospitals and housing.
Meanwhile, we continue to invest in the growing off-site fabrication market, with new CNC routers, saws and turret punches, as well as new premises in the UK and Ireland.
Life is still tough in the medium-term, but with a healthy cash reserves providing insulation from the cold economic winds, we remain positive and ready for the upturn.