Neil Clydesdale, Managing Director at Eterna Lighting, argues that more needs to be done to protect the electrical industry.
When any industry becomes pressured, it is no surprise that businesses, and the individuals within them, move much of their focus to the short term – it clearly makes sense to change their horizons in these times to protect their market position, but sometimes the consequences are far reaching and not always to the benefit of the industry.
The electrical installation market is no different with weaker underlying demand in most sectors, and it seems very few people in the supply chain are immune to the challenges this creates.
The underlying reasons for this are multi-faceted, with BREXIT uncertainty and the catastrophic impact of web retailing on the high street at macro level, allied to specific industry issues surrounding the demise of Carillion and negligible barriers to entry across most tiers of the supply chain.
This is further complicated with many long-standing businesses within the electrical industry finding more agile competitors have taken significant share with web-based sales tools, breakthrough service propositions and pricing not burdened with significant overheads.
The horse has bolted
Whilst some of these symptoms have manifested themselves in the last 12 months, many of the underlying issues have been in evidence for much longer. As a collective industry, we only have ourselves to blame for not taking the required actions earlier.
This has led to chronic oversupply in many product areas, not just in the UK, but also in the overseas part of the UK supply chain where so many electrical products and components originate from.
More pertinently, it has resulted in increased competition, reduced margins and concerns about cashflow as the resultant race to the bottom continues.
It could be argued this is good news for the end client as prices tumble and additional services are offered, but this is only likely to be a short-term benefit.
Cheapest isn’t always lowest cost
A major concern is that costs, and therefore quality, are being squeezed with lower prices continually offered in a race to the bottom despite the genuine increase in input costs.
The cheapest offer does not always constitute the lowest cost or best value, especially when you consider the true risk profile, or question the provenance of the product in question, but more importantly it has to be recognised that some of these products may be potentially life threatening if faulty.
Of course, it is down to the manufacturer or supplier to ensure goods are compliant and perform as advertised, but some suppliers do not have the expertise or infrastructure to protect the market adequately. Everyone in the supply chain needs to take on responsibility as so many of these products are safety critical where failure could prove fatal.
The inevitable shakeout over the next few years will no doubt lead to some weaker or less established brands disappearing, which could prove costly for the distribution channel, as they suddenly find themselves picking up any warranty claims, making any short term saving at point of purchase very costly.
Another consequence of the race to the bottom is that it will stifle the investments required for new technologies, product development and the training needed for the industry leaders of tomorrow.
Please do not assume that I believe our business is perfect – we have made great strides in recent times with product improvements, service enhancements and new marketing tools so we can be considered a reliable and valued partner rather than just a supplier.
There are some really good lighting suppliers out there across all price levels that you have to admire as they do a good job and are worthy adversaries that we begrudgingly respect.
Whilst the responsible and successful distributors and installers do their homework on products and vendors, it is made increasingly difficult for them without true market leadership, regulation and third party assurance.
I fully appreciate that work has started in some areas to address these issues but it is now time for the market leaders, associated industry bodies, lawmakers and other senior stakeholders to accelerate their efforts to protect the industry from itself and start supporting the businesses that are trying to operate responsibly.
For more information on Eterna Lighting, visit: www.eterna-lighting.co.uk