Tuesday 21st August, 2007
Ultraframe has been criticised for arrogance, but if it is true that it was ever high handed, the evidence of its fabricators day held in late June, suggests that the company has changed for the better. If anything, it appeared to be excessively open to new ideas and criticism. That does not mean it has lost the ability to think big ideas.
Take Design Choice, a new idea that basically means ultraframe has decided to utilise the power of the software industry. ultraframe’s vision is that whatever software the customer decides to use, it can be used to create the perfect electronic order to ultraframe or one of its fabricators. There’s a long way to go, but the foundations have been laid.
New Chief Executive of ultraframe, Grahame Hall had been in the job for 12 weeks when the fabricators day was held. ultraframe, he said, had got itself into a “ditch”, slow to bring to market some of the many innovative new products created by its R&D team and failing to listen to its customers. The company had gone from having well over half the market to somewhere close to 40%. “As a result its financial performance suffered and it had to get rid of a lot of old habits.” Grahame Hall maintained.
ultraframe had enjoyed a good reputation historically for product development but this had become a “bit constipated”. He took the example of the proposed twin bolt. “This almost demonstrates what's good and what's bad about ultraframe at the same time. Our customers want this and are looking forward to having it but what's bad is that we talked about it 18 months ago and it's still not in the marketplace! The Achilles heel of ultraframe is that these `simple’ little projects take an awful long time to develop. We need to find a way and we are finding ways of getting these things into the market much more quickly for you guys to evaluate and tell us whether they are any good or not and for us to change them accordingly. Whilst we are in the ditch that is the current market place, we are going to become better ditch fighters. We are going to start producing products that the market needs and we are going to start listening to you guys a lot more.”
Would that be enough to make ultraframe and its customers prosperous and bring good times for all, he asked?
“I'm not so sure it will,” Grahame continued. “There are some worrying features of our industry, particularly the fact that fundamentally; conservatory design hasn't moved on for probably 15 years. The biggest innovation has been the increasing replacement of polycarbonate with glass. The reality is that the conservatories we put up now don't look an awful lot different to the ones that we put up ten years ago and I think that's a worry for all of us. So, the second part of our strategy is really to try and get us out of the ditch.”
Grahame went on to explain that if you want to add space and light to your home you have probably two choices at the moment. One such option is the addition of a conservatory, which might cost you between 10 and 15 thousand pounds, depending who you buy it off and how big it is, a relatively straight forward process. More often than not it doesn't require planning and so the consumer will get it quite quickly. The alternative to that is to add a traditional brick built extension.
He continued: “For those of you who have been through the process of adding an extension you are probably wincing already. Because how much does it cost? Well pick a number, probably start from somewhere around 60 grand. It probably ends up at something upwards of 100 thousand. It probably takes you twice as long as you thought it was going to take and can create a real mess around the home which is disruptive for the family. In money terms we have got a massive value difference. We can move the industry forward if we can start to produce some innovative answers as to why I should not buy a £10,000 white plastic conservatory when I can buy something at £20-25,000 that is much more aspirational, much more modern in design yet which still has all the advantages of being able to be put up quickly, easily and has cost certainty about it - the last thing you can say about traditional builder-executed extensions. In summary, we think there is a gap we can occupy.”
Ultraframe ‘s aim was to give its fabricators value-adding components. The aim was to make the purchase of a future conservatory/extension a bigger ticket sale. “From what I have seen we are the only people who are innovating and if we stop innovating then we stay in the ditch.”
Good news on the financial front
Financial Director Daren Wallis detailed how Wendland and ultraframe combined; made an operating profit in the half year, October to March. Sales were up but there were also significant savings in material purchasing “in terms of out-sourcing to China”.
Virtually all the company’s profits were earned in the summer months so the company was on track to get a reasonable return on sales compared to a marginal one in the previous year. “Some of you, I'm led to believe, are doing rather better than that,” he told the fabricators. “I have got a bench mark in my mind of at least 10% for us.” But he added: “From a financial perspective, I think it's very good news that all the signs are positive.”
However the company, along with the rest of the marketplace still faced some critical trading issues over the next six months, including interest rates and the stability of the industry. “What impact do interest rates have on people's capacity to buy big ticket items?” He asked. “How is it linked to how much debt they have, what impact will that have on our sales?” By industry stability he meant that “there's still quite a lot of weak players in the industry, will they survive?” But possibly the biggest single issue was the price of raw material, with aluminium prices about $800 a tonne higher than they were 18 months ago and remaining very volatile.
“We are very pleased to be where we are but it would not take much to go off track and make a big dent in our plans. So, all our efforts are focused on ensuring that this does not happen.” concluded Daren Wallis.
Ultraframe plans audacious software revolution
“Design Choice is all about utilising the power of the software companies and harnessing it for the benefit of our fabricators and retail partners. It consists of a protocol and a choice of software packages, which together enable ultraframe’s fabricators to trade electronically using almost any software package of their choice.” Explained Nick Brown, Commercial Director at ultraframe. “If Design Choice is a lock then the key to that lock is electronic trading because the moment we get installers trading electronically with the Team ultraframe fabricators, in a proper way, you really lock them into the business.”
He said the race was now on between the various roof manufacturers to see who could achieve something like Design Choice first. “’Winning’ is about how fast we can get there, because let's make no bones about it, we are ahead at the moment. We can do things our competitors can’t do; but they will try and copy us. Our principal aim is to put our fabricators into a fantastically beneficial position where they would be the only ones able to trade electronically with all retailers, regardless of which software the retailer was using.” said Nick Brown. “If you can offer electronic trading and you can help the customer to believe in it then how does your competitor hope to compete with you? I think this is a critical strategic moment. We believe that when we get it right we can put ourselves in a great position and `lock out` competitors from doing business with lots of our customers.”
Team ultraframe, the company’s network of fabricators, needs to promote design software to retail customers and encourage them to trade electronically. The arguments for electronic trading were that ultraframe will `lock in` its volume and reduce errors. About 25% of our roofs today come in via RoofWright in electronic form (one of the five main software partners). We don't have to design them, we don't have to check them - they just flow straight through the system. It takes cost out of the system for us and our customers and it reduces errors. It makes us more competitive and with that, we can win new customers.”
Nick Brown quoted the example of British Standard 6399 and the structural design guide. “We know that our retailer customers are out using this legislation to ask consumers has our competitor got this? Is it a fully specified BS6399 roof? - If it isn't you have really got to be careful because the structure is liable to fail in cases of extreme weather, which are becoming more and more frequent across Great Britain.
We have customers, major users, coming to us over the last three or four months saying to us we are going to have a bit of that action. How much does it cost us to buy products from you? Therefore, we are not having conversations with prospects about how cheap our roofs are, we are having conversations with people because we've been asked to go in and they understand that we are going to charge a premium for the best product on the market.”
Nick Brown continued: “We are a premium solution. Our fabricators are premium fabricators. You are better at what you do than your competitors. We have a premium product. We have a premium brand. Those things are great, but they will only earn you so much.”
Design Choice, if rolled out to the entire customer base would cost ultraframe something like £3m a year, a big number and a big price to pay for success. But the concept of Design Choice has already changed the negotiating position of ultraframe, raising the possibility that it could achieve lower priced licences from the software vendors. Evidence for this new relationship could be seen in the fact that five of the major software companies had chosen to attend the fabricators’ day, namely First Degree Systems, RPS (RoofWright), Windowlink, Sympla and Business Micros.
“By showing these vendors our vision, all of a sudden there is a negotiating lever... we can negotiate with them to make the cost as accessible as possible for our customers. It was a major coup to put the five main players together at this `mini show` here in our building, which we never thought we would manage. We have got them talking to us about how we promote Design Choice and how we finance the whole thing. Generally what we want to do is agree that if there is a software solution out there, let's get a price, let's put it into our offer and let's give it to our retailers and say there's your choice guys.”
If successful, ultraframe would be able to offer fabricators packs of 25 licences from a variety of software providers which the fabricators could then sell on to retailers. Special pack prices have already been agreed for many of the main software brands. On top of whichever individual software flavour retailers choose, they would also get the option of SDG Plus, the system which seamlessly integrates structural design calculations for the Classic system, ensuring structurally perfect roofs – described by Nick Brown as “a piece of magic”.
He continued: “We recognise that getting SDG Plus into the marketplace has significant advantages. It facilitates the retail installer getting their roofs to comply with BS6399, upgrading its specification as necessary at the touch of a button. Demonstrating compliance with BS6399 in this electronic way is good for us and, of course, it something our competitors can't do. What we want to do is to see the SDG Plus used in every installation company, because put quite simply - it’s the future.”
As always, it seems that ultraframe would not be sitting still. “Our task is to keep this moving forward so that at each and every step we are way beyond where our competitors can get to,” Nick Brown said. SDG Plus is clever but the company already had a planning application generator under test and other several modules in development. “It prints out a pack of planning application documents,” said Nick Brown. “Despite the fact that many conservatories are exempt from planning, high quality retail installers will often put one in three through planning anyway to make sure. We are helping retail companies to execute each conservatory to the very highest standards, it’s part of the vision of any forward thinking company and we fully intend to ensure that it is an achievable reality for any users of the ultraframe system.”
The evidence seems clear from this most informative of days – the ultraframe of old, if indeed it ever existed; has gone, replaced by a lean, agile and forward focused organisation who seem committed not only in continuing to drive the conservatory industry, but developing exciting new niches which their customers can seamlessly become a part of, thanks to Ultraframe’s unique recognition that electronic solutions are the way to improve the entire industry.
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