Travis Perkins boss calls for a 'systems approach' to retrofitting
Builders merchants Travis Perkins wants to take a central ‘integrator’ role in market to make the UK’s housing stock more energy efficient, a move that would mark a major change for the group and have them competing with the big construction contractors.
Chief executive Geoff Cooper told H&V News that the group was “in a good position” to bring
together manufacturers, small contractors and installers and environmental specialists to create a retrofitting product for consumers.
He said the lack of a “systems integrator” was the main thing holding back the retrofitting industry - estimated to be worth £500 billion over the next few decades - from achieving scale. Without scale, he said, suppliers simply would not innovate.
“We have got to see something that will make vendors and manufacturers begin to develop their offering and work together to provide a systems approach. One of the issues we have is there are lots of individual applications and specialist installers but no one has put a
system together.
“If we had a systems approach, we could begin to motor. At the moment that system integrator does not exist”
Mr Cooper added: “We could be that integrator - we couldn’t from our existing resource base but it’s a very interesting area to look at.”
Consolidation
Two weeks ago, the builders merchant took over plumbing and heating specialist BSS Group in a deal worth £533 million.
It is the biggest piece of consolidation in the sector since the recession began.
Mr Cooper said the company’s access to “millions of consumers and thousands of trademen means we are in a good position” to bring together the technical expertise of manufacturers, educate installers and market directly to the general public.
“But we need the tools to do the job and a big part of that is having more certainty.”
Mr Cooper said the expansion could come through acquisition or organically by recruiting new skills.
“It’s very early stages and I am flagging it up as an opportunity,” he said. “We have been tracking it as an opportunity for five years - now we would be prepared to make that move, and we would not have said that before.”
He said the fact that oil prices had not fallen during the recession was a key sign to markets and industries that energy efficiency would continue to gain momentum.
“I think people realise that energy prices are not going to drop and that provides a better economic platform to invest.”
Many contractors worry that there isn’t enough proof about the performance of particular
technologies, allowing them proper comparison and predictable results.
Mr Cooper said: “Concern is definitely there. The scale of activity is such, at the moment, that there isn’t a good evidence database that you can refer to.
“You can’t say with enough confidence that this kind of building with that kind of technology installed will improve its carbon footprint by x - it is just not available. But eventually it will come - through experience, through word of mouth, through journalists
writing about it.”
Mr Cooper also predicted that VAT would rise to 20 per cent, but that the increase would not come into force until the beginning of 2011. “A couple of retailers havecome out and said ‘tell us what the policy is but don’t implement straight away’ so we have time to do
something about it.
“That’s quite important. I would bet most retailers and distributors are assuming there will be a rise, and assuming that it will go to 20 per cent, and that it won’t come in until 1 January.
“I think that’s probably right - I think that’s what we will see. I think the Tories will have their way and the concession [to the Lib Dems] will be not bringing it in until next
year.”
Need for detail Mr Cooper said he had been encouraged by the new coalition government’s announcements on the economy, such as the setting up of a green bank to loan money to
householders for investment in energy efficiency improvements, but he added that “the devil will be in detail”.
“A general problem - which isn’t a criticism because the government has only just started - is that there is a lot of detail to come.
“We will have to see the detail of the legislation in terms of how it will work.”
Referring to the cancellation of the Low Carbon Building Programme, which had funded
renewables investment, Mr Cooper said: “There has been what I expect is understandable disappointment about the withdrawal of funding in a couple of areas, but my own view is
that it is not as bad as we might have feared.
“If we can make the case for the building industry as being a multiplier in the economy, if we can make that connection, we should be able to protect the industry from a lot of the really bad cuts.
“The Government has made a promising start. It’s not as bad as people might have feared. It’s a tolerable picture.”
What the future holds
Sales growth is accelerating through the first half of the year, according to chief executive Geoff Cooper, with the company likely to improve on its 3.3 per cent year-onyear
rise in merchanting sales recorded up to April.
He said that after problems with heavy snow in January and February, “May is better
than April which was better than March. A couple of companies recently have reported like-for-like sales growth in the early teens, and although we haven’t made a statement to the markets, I wouldn’t disagree with that.”
He said a surge in new housebuilding played a significant part in the performance, but said he was “slightly worried that housebuilding has begun to falter in the past six weeks. We
will have to see whether that is an election effect and whether we see it firm up through the summer.”
He said housebuilding would fully offset the fall in public sector work and the latter will
“be reasonably firm because the cuts that are coming cannot turn off the work quickly”.
“Our prediction is that by the time we get to the end of 2011 we will see those cuts take
real effect. That is subject to what might happen with Building Schools for the Future.” He also expected repair and maintenance across sectors to come back strongly.
“That adds up to a ‘not bad’ picture for distributors, and a better one for manufacturers,
and a worse one if you are exposed to public sector and are late-cycle,” he said. “That
is without knowing what will come into the emergency Budget, which may have a bigger effect on construction.”
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