Thermoseal Group Warns of Market Consolidation as Automation Advances in the UK

The specialist insulated glass component manufacturer and distributor has suggested that moving to complete automation, which will likely only be possible for the largest fabricators due to cost, could leave smaller companies unable to compete, as savings made on labour drive prices down. 

Drawing parallels with Germany, Mark Hickox, Sales Director for Thermoseal Group, said: “Germany’s been automated for 10 years, and I think the UK has got some catching-up to do.

“One thing that naturally follows automation is a concentration of the market. A lot of small or medium sized customers will be priced out of the market and will end up being bought by the bigger ones. So, in the end, you will have 50 large customers instead of 200 of varied sizes, for example.”

With UK fabricators also facing increased employment costs from April, Mark believes the impact of this added financial burden will only accelerate the move towards automation.

"The other main reason to go automated is the hikes in minimum wages and National Insurance Contributions, which are really making some of our customers struggle,” he said.

“This could add thousands of pounds to the wage bills of a business that may only generate small amounts of profit. Passing that on is very difficult. But it's not going to be cheap to borrow money this year – we have already seen inflation rise which has made the prospect of interest cuts appear less likely.”

In addition to rising employment costs, labour shortages experienced by many manufacturers - from small to medium companies, to super fabricators - are also fuelling the move towards automation. 

“It is getting more and more difficult for our customers to recruit skilled operators, and so we’re seeing huge staffing problems across the sector”, Mark said. “If businesses are struggling to find the right people, then it is surely another catalyst for the move towards more automation,” he said. 

Thermoseal Group, which became part of the Fenzi Group last year, recently saw annual production capacity of its UK-manufactured Thermobar warm-edge spacer more than double after investing in automation. 

For more information, please visit www.thermosealgroup.com, or call 0121 331 3955.