The dust is still settling after Prime Minister Theresa May’s Brexit speech on Tuesday. I put down my thoughts in a mammoth 2000 word review. If you feel compelled to read such an essay, you can head over to DGB Brexit and check it out there.

Back to reality, and there are a number of big issues facing the UK glazing industry this year. One of the main ones for us all is the price we all pay for our wares.

The big swing in the value of Sterling to the downside last year saw a round of price increases, some immediate, some delayed, which eventually trickled down to installer and home owner level. The question is, what are the chances of another round of price increases?

It’s all down to Sterling

At the end of the day on Tuesday, the day of May’s speech, Sterling settled at $1.24 and the Euro was a nudge under 1.16. This was a rise of over four cents against the Dollar from it’s lows on Monday which saw it drop below $1.20 since the flash crash late last year.

However, Sterling is still a good 15% down from where it was before the EU referendum. This was the cause of the price increases in the second half of 2016. Some companies chose to jump on it almost straight away, with some horrendously steep price increases reported by some. I guess some saw a chance to make an extra wedge out of the situation. Some companies chose to ride it out for as long as possible, only passing on increases near the end of the year when they really had to.

Since then, Sterling has traded within a six or seven cent range against the Dollar. Big swings historically. Relatively small in recent times given the volatility. But is this enough of a swing one way or another to affect prices?

I would say that any sustained drop below $1.20 and our industry’s suppliers will use this as a means to justify any increases they decide to implement. If it stays where it is, with this range now being the relatively recent norm, any price increases would be unjustified at this time. In my opinion at least!

If they can go up, they can go down

I will repeat a point I have made in previous posts, in that those suppliers who have raised prices and explicitly blamed Brexit and the drop in the value of the Pound should readily reduce their prices should the value of our currency recover.

The only company so far that I can see which is implementing any sort of transparent pricing policy is Brisant, the makers of the Ultion door cylinder. On their website they have designed a ticker which shows their prices moving up and down by 2.5% for every 5 cent fluctuation. This is a refreshing approach to glazing sector pricing. I am disappointed to see that no other glazing industry manufacturer has implemented such a thing. It would have been a positive move from the industry’s fabricators to installers.

But, they have to come down if Sterling recovers. There were a number of manufacturers who seemed to move almost immediately when Sterling fell in the hours after the vote. Way before any real effects of the drop would have been felt at business level.

There are a number of companies who have made it very clear that their increases are because of the drop in value of the Pound. There will be pressure from installers who were subject to those increses to see their suppliers reverse them should our currency recover in any meaningful way. And quite right.

A time to tread carefully

Lets say that Sterling goes in reverse and the value falls to say $1.15 or perhaps even $1.10. What happens then?

If it did fall to those levels, we have to all assume that prices will go up again. It would be unreasonable to think otherwise. The question we have to ask ourselves though at this point is how much of that price increase is absorbed by all companies in the glazing industry supply chain.

Naturally, systems companies don’t want to pass on too much to fabricators, and the same goes for fabricators to installers. But full increases cannot be 100% absorbed by those at the top. They have to trickle down to home owners at some point. If it didn’t, profit margins would eventually cease to exist.

At the same time, our industry needs to be careful not to pass on too much so that it starts to erode home owners’ ability to freely purchase our products. We risk derailing growth in our sector if our prices rise too much too quickly to a point where consumers start putting off big ticket item purchases.

It is a time to tread carefully. As an industry we have to balance the cost of our good with costs to home owners. We have to maintain margins but consumers have to take up some of the weight too. It may well be one of our biggest issues to tackle this year.

Circling back to the original questions of how likely more price increases are, I would say low for now. I know inflation is starting to creep up, but that is an after-effect of the drop in Sterling value from last year. So long as the Pound stays stable or even improves this year, and so long as fabricators don’t take advantage of installers, I would hope that we’re not looking at any more increases this year.

I could be wrong. Time will tell!