Despite strong demand in the final quarter of 2022, uncertain times lie ahead for the UK bed industry, according to the results of the NBF’s latest State of Trade survey.
A quarter of manufacturer members and almost 40% of supplier members are predicting weak demand for the first six months of 2023 – with just half anticipating it would be satisfactory.
And while supply chain issues may have eased, uncertainty about rising costs and difficulties finding staff are still presenting the sector with many challenges.
The NBF’s new State of Trade was sent to all NBF members (manufacturers and component suppliers) during December to gauge overall business levels and issues over the last quarter of 2022 along with their expectations and concerns for the first half of 2023.
Both manufacturers and suppliers experienced extended lead times in 2022, mainly due to raw material issues, but the general feeling was they were not going to get any worse in 2023, while a healthy percentage are expecting them to improve.
Employee head counts are fairly stable across the board – in fact more than half have the opposite problem, reporting concerns about staff shortages and struggling with recruitment and retention in some areas of the business.
For the manufacturers, while most key component materials (springs, timber, fabric and fillings) increased by varying degrees during the last quarter of 2022, it was those relying on foam as a component who saw the biggest increases. More than a third saw their foam costs rise by 10%-15% while a further 6% reported a rise of 15%-20% and 6% said their foam costs increased by over a fifth.
Spring costs rose by between 5% and 15% for a third of members, while 36% reported increases in their timber costs of up to 20%. Ticking and fabric costs also increased in quarter four, with around a third of members reporting increases of up to 10%.
‘However, there is hope that the worst of the component material increases are behind us with more modest increases expected in 2023. Many raw material costs for supplier members also rose during the last quarter of 2022 but not to the same levels experienced by manufacturer members. Again, there is optimism that 2023 will see these raw materials prices settling down,’ says Simon Williams NBF head of marketing and membership.
‘Energy costs have been and will continue to be a major concern for all businesses. The renewal timings of individual members’ fixed term contracts are critical to their business planning, although there is a general feeling that energy costs will stabilise during 2023.’
The majority of both manufacturer and supplier members either held their prices in the last quarter of 2022 or increased them by single digit figures. Looking at the next six months, price increases are also most likely to be single digit figures as overall inflation starts to come down from its current high levels.
More than half of both manufacturer and supplier members reported a drop in their profit margins in the last quarter of 2022, although a further 36% and 37% respectively had managed to hold their margins.
Looking at the first six months of 2023, almost a half of both supplier and manufacturer members expect to maintain their current margins, while almost a quarter of manufacturer members are anticipating making modest improvements. However over 40% of suppliers predict a decline in their margins during the first half of the year.
Both manufacturer members (58%) and supplier members (62.5%) listed a lack of orders/sales as their major concern for their businesses in the first half of 2023.
Some 21% of manufacturers were also concerned about the lack of skilled labour: this was also a concern for supplier members, along with availability of finance.
