Capacity – Riding the Storm
Housebuilding’s supply chain is going through the mill every bit as much as those building the houses.
The sector is still dealing with the economic stresses of the last five years and based on data from The Insolvency Service, around 16,600 businesses from the wider housebuilding sector closed between 2020 and 2024 – not counting anything we’ve lost in the last 11 months.
So that will be close to 20,000 businesses that have closed their doors forever in the face of demand swings and ensuing negative cashflows by the end of this year.
So what happens when demand picks up?
A year ago, Professor Noble Francis (Economics Director at the Construction Products Association) estimated that the supply chain would need to be operating above 90% if the sector was to meet government housebuilding targets. However, where there are cashflow challenges, a significant number of supply chain specialists have closed or mothballed factories and are facing the costs of restoring full operational capacity, adding pressure to already-stretched cashflows and credit rating challenges.
At Scotts, we are fortunate to have been able to ride the storm with careful management, maintaining and even growing our customer base with a sensible approach and continued focus on quality or product and service.
As a result, we have been able to continue to invest throughout the last 24 months. This investment has going into our people, equipment and processes and as a result, our teams are well placed to ramp up significant operational capacity at our two factories in the East and West Midlands quickly and without compromising quality.
If you have any projects or developments you’d like to talk to our team about, call us today on 01832 732366 (Thrapston).
