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Why cheap imports are a false economy

While the UK market is open and everybody is welcome, a critical concern must be that products should CE certified, says Sami Caglar. And, he adds, we also face other challenges from imports
Why cheap imports are a false economy
One economic rule has remained constant for hundreds of years - if supply is higher than demand then the price will fall. But what will happen if everybody tries to sell on price alone and doesn't think about the future?

Every year we see new brands entering the market, bought in by distributors promising to gain market share for the manufacturer. This may be achieved in the first year or so, but then another competitor decides to launch an even cheaper brand with similar promises. This can drive the original manufacturer to drop the distributor and start selling direct or offer better prices to retain sales for another year. In reality, what happens is the distributor establishes the brand in the market and gains a share of the branded market only for the manufacturer to take that market share for its own.

Apply the same scenario to six or seven brands coming into the UK market; each share of the market becomes too low to keep each business profitable through distributors so again, they are forced to go direct to gain more profit margin from the same amount of sales. All the hard work and effort the UK distributor has done in order to gain a healthy market share for the non-UK manufacturer is null and void.

That is why, here, at SFL, we are proud not to sell directly into the market.

Product quality and longevity
But price pressure is not the only challenge for chimney suppliers. Product quality and longevity are also crucial issues. I recall a time when a contractor, defending the use of a cheap foreign competitors' product, told me: 'It's cheap and cheerful, but it does the job'. My reply was: 'How do you know it will do the job?'

Of course, there is nothing wrong with healthy competition. However, the consequences of installing inferior products can't be underestimated. Any professional manufacturing organisation can easily diversify from producing, say, tin cans to chimneys; however, without the expertise, experience and knowledge to support the product, it might as well remain in the tin can business. True product manufacturers are experts in their field and this is the exact added value that is often overlooked at the procurement stage in favour of the bottom line.

Investment for the future is a key to success. And that means investing in such areas as expertise, knowledge, training research etc. costs the manufacturer money. Of course, investing in a high level of expertise and consequently gaining trust does attach a premium to the product cost. If you have ever attended a trade fair in an emerging economy, you will have seen many leading products cloned and available for sale.

Investment is critical
There is little innovation because this takes a great deal of time, expertise and investment. Investment in quality product is the only future proof way of offering the right solution at the right time to the customer.

On top of this, to know your market is to know your product. This can't simply be conjured up in a start-up factory in Asia or Europe or by copying a branded product. Expertise in your specified market comes from knowledge and experience gained over many years together with continuous investment in training. And yes, this continued investment does cost money which in part has to be reflected in the product cost.

A CE mark is not the only criterion that guarantees a safe and effective product. Whole supply chain quality incorporates these attributes and more. The notable ingredients of the supply chain are:
  • Procurement of good quality materials.

  • Incorporating quality into products that have been designed well and tested for their purpose, focussing on the safety of the end user.

  • Working with professional, quality companies; consultants who can choose the right product for the application and who can configure and design the chimney system in line with UK regulations and focussing on safety.

  • Providing effective and efficient after sales service.

  • It's unlikely that you will find all of these elements in cheaper imported systems.

    British manufacturing is built on innovation, quality and expertise. As an industry and a country we all need to work together; the manufacturer, materials providers, consulting engineers, contractors, buyers, installers and distributors in order to raise awareness of the benefits of procuring and installing quality products.

    // The author is managing director of SFL Flues and Chimneys //
    18 June 2012


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