Watch for fast market changes as Government cuts take effect
Being alert and in touch will be crucial elements in surviving the cuts in spending by Government and local government, says Mike Jenkins.
HVCA Business Plus has been carrying out some research into the potential changes to heating, ventilating and air-conditioning markets that could be triggered by the coalition Government’s October spending review. It seems probable, although by no means certain, that the Government’s cuts are going to have a major effect on the way local authorities and housing associations organise their building and housing maintenance budgets in 2011.
Latest forecasts are that the UK will see the smallest number of new homes built, in both private and public sectors, for at least 10 years. Some estimates refer to public sector starts in 2009/2010 being the lowest since 1923. The Department of Communities & Local Government’s capital spending budget, including repair and maintenance, is predicted to see cumulative falls of £6 billion over the four years of the spending review.
The Audit Commission’s Comprehensive Performance Analysis (CPA) suggests that such cuts would be equivalent to the cost of building 21 874 new houses over that period.
It does not sound good for HVACR contractors, does it?
HVCA Business Plus can help
Keeping track of the maze of often conflicting public and private sector statistics is more than most businesses, especially small businesses, have time for. HVCA Business Plus will be continuing its constant close watch on Government and local-government housing and maintenance policy statements and maintaining its analyses of private sector building and housing development statistics. These analyses enable HVCA experts to advise the members on the way the public and private sector markets are going in the regions of the UK, and sometimes to provide pointers for their planning and marketing. However, the hard facts are that every business is going to have to spend more time nurturing its public and private sector contacts during the tough times ahead.
Everybody running HVACR businesses will need to keep closely in touch with their established local-government contacts, particularly over the next three or four months, to know how their plans for 2011/2012 housing and maintenance budgets are going. Regional and local radio and TV news bulletins, local newspapers and local authority websites need to be scoured for information prior to the February/March council budget and policy announcements.
Every council’s approach will be different and, if one borough or district council budgetary statement does not look encouraging, look in detail at neighbouring councils’ announcements. Nurturing contacts with individual councillors, particularly those who are members of finance and planning committees, can provide a great deal of advance information on policies and projects which might provide work. Keep in touch with new planning permissions via council web sites.
Contacts with private-sector housing developers similarly need to be improved to get some idea of when and where developments will actually be starting. The probability is that, in the new environment created by ‘the cuts’, there will be more starter homes, ‘affordable housing’ and apartment developments, and fewer ‘executive homes’ as pressure on mortgages continues.
Remember to maintain close contact with your bank’s business manager and provide frequent updates on your progress. Many a business has survived tricky times during the past few years simply because someone at the bank knew what the business was doing to improve its position, and trusted the customer.
Keep in contact with HVCA Business Plus
The HVCA really can help with advice on cash management and credit control, marketing, customer relations, forecasting and planning. The association maintains an overview of markets and policy that contractors can use, alongside their own regional information, to forecast building starts and maintenance expenditure. For more details, visit www.hvcabusinessplus.co.uk or freephone 0800 917 1541.
Mike Jenkins is group co-ordinator of HVCA Business Plus.