All industry sectors are feeling the effects of an economic downturn and the situation has been made no easier for the commercial property industry due to a number of factors, including the increase in energy and steel costs. Alan Jenkins, commercial director for Hörmann UK’s industrial division, believes maximising your green credentials can alleviate some of the financial pressure on the manufacturers supplying the industry. There is no hiding from the fact that the whole country is in a bit of a mess and the light at the end of the tunnel seems but a tiny spec in the distance. Most companies and businesses will in some way be hit financially by various factors affecting the economy and feel a need to tighten their belts.
Manufacturers and developers alike are feeling the pinch of increasing steel prices and energy costs. With less steel available the price has risen to such a degree that it is definitely one of the factors affecting the slowing rate of construction in the UK today.
The government has not helped with its decision to increase empty rates tax to 100% after three months for most properties like shops and offices and after six months for industrial, warehouse and storage properties, as this places further strain on this sector and ultimately has an effect on the manufacturers that supply them.
This new tax reform represents a significant increase in costs for owners, especially those owning bigger warehouse and distribution centres that often take far longer than six months to let or renovate.
The message I am getting from some of the larger developers we deal with, is that we have reached a period where the erection of spec built sheds by property developers has slowed down considerably and while it is reported that there is still a reasonable demand for distribution centres, these are now more commonly built with a lease already agreed.
This situation is somewhat helped by the fact that erection times are now far shorter, down to as little as 16 weeks in some cases thanks mainly to modern construction methods.
However, although the market will continue to be affected by both the steel price increases and the imposition of ‘Empty Rates’, it is nowhere near as significant as the increasing rise in energy costs and this is where the entire supply chain is being forced not just to discuss their green credentials, but to prove them.
There has been, and continues to be, a major shift towards the meticulous calculating of the carbon footprint of buildings with the end goal of developing a carbon neutral facility. This not only ticks the corporate social responsibility box and keeps the green watchdogs happy, but can end up saving companies a packet in terms of overall operating costs.
These days the specifications for big industrial buildings include energy saving methods and equipment such as photovoltaic panels that generate electricity, solar walls that produce heat from sunlight, energy efficient lighting and on-site power plants that reuse the heat produced by air conditioning. Industrial door manufacturers, like ourselves, are able to offer a wide range of doors that reduce energy loss which is integral to maintaining a carbon neutral facility.
Achieving this carbon neutral goal depends hugely on the green credentials of all products and equipment throughout their entire life cycle, and those companies that supply and manufacture them. Many manufacturers out there are making a big song and dance about how environmentally friendly their operations are, but ask them to prove it and actually supply facts and figures and the many very quickly becomes the few.
At Hörmann we have procured the services of a specialist sustainability consultancy, dcarbon8, to come in and measure our carbon footprint and advise on further measures we can take to reduce it. By having dcarbon8 on board we are able to provide comprehensive information to our clients about our carbon footprint and this information is absolutely vital, as are the numbers from all other companies that make up the supply chain, to calculating the overall carbon footprint of a building and then implementing measures to achieve carbon neutrality.
In my opinion it is those few manufacturers, who have the necessary green procedures in place, that will not only save costs through their own energy consumption, but secure more contracts and thereby increase profits during these difficult times. There is not a whole lot we can do about rising steel prices and government tax reforms, not in the short term anyway. However, as individual manufacturers we are in control of our own carbon efficiency, an operational factor that can make a huge difference to the balance sheets.