Kane says companies like his have been partly victimized by demand as well as supply – normally not a problem.
A typical conservatory company may install windows ordered months ago, but with delivery times now going to six months or more as customers flock to improve homes amid blockages, Kane must honor frozen prices beforehand. huge cuts to materials.
“In the normal course of things, this is absolutely fantastic because you have a great backlog to work with. But, in fact, it becomes an albatross around your neck because the input costs are rising so quickly and you have agreed selling rates for your customers, ”he says.
“This means that the margin you have in your existing contracts is running out every day. “
Kane points out that its raw material costs have increased by around 30% in an industry that typically offers margins of around 3%. Steel and glass pose the biggest puzzle, with price increases of up to 40 pc.
As he passes the extra costs on to his corporate clients – “everyone shares the pain as much as possible” – Kane says the situation offers some frustrations.
However, some of its suppliers are able to apply surcharges to existing agreements if their own costs increase – an agreement that it does not have with its own customers – meaning it is prepared for additional spending for glass and resin components in the coming days.
“We are weathering the storm and making sure that our new contracts that we sign today, tomorrow and the next day are covered,” he says.
As with many companies swallowing the costs and aiming to pass some of it on, Kane argues that this isn’t an existential threat – just a big bump in the road.
“The demand is still good and I think our customers understand that the price of the products is increasing. “