Market looks for something special
Manufacturers are increasingly turning to custom-made or ‘creative’ lintels to extract more value from a static market.
Since The Strategy Works last looked at the steel lintels market for BMJ in December 2003, further consolidation has taken place. Most notably, Keystone have acquired one of their main competitors, IG, making them the dominant player in the UK with a turnover of £37m – 55% of the total UK market for steel lintels – estimated to be worth around £68m. Keystone have achieved this position from a standing start in 1990 from their Irish roots in Cookstown, and now own four manufacturing sites in the UK and Ireland.
Number two in the market are Catnic, who claim a market share of 31%. Catnic are a division of Corus, who in turn were acquired by Indian-owned Tata Steel last October.
The lintels market is not naturally growing, and no significant new capacity is being added. Demand is suppressed by the higher proportion of flats within the building stock, according to Catnic managing director Malcolm Boyles, who believes the market is at best 'stable'.
Keystone, who discontinued the Expamet brand following the acquisition, have refocused the IG brand on the house builder and, in particular, ‘specials’ – in which Sean Coyle, managing director of Keystone, believes the real potential lies. "The first thing we did was introduce a brochure on creative lintel solutions, he says"
Keystone claim that 25% of their group turnover is now down to specials, which (in Keystone’s definition) are custom-made or ‘creative’ lintels designed to enhance the architecture of the building as opposed to heavy engineered beams. Coyle is keen to use Keystone’s literature and website to inspire the customer. "We’re trying to get the architect to really utilise the lintel’s creative potential through their design".
Coyle points to the new public buildings that have integrated their specials and believes they have effectively expanded that segment of the market.
It’s a steel structure we’ve manufactured, it’s not just a lintel. We believe creative lintel solutions are growing and we promote them aggressively within the industry. Bay windows, apexes, arches have all been made possible; this is because we show people what we can do.
In 2006 Catnic opened a new manufacturing facility dedicated to special lintels to satisfy the need for increasing creativity, as articulated by architects. Boyles confirms:
The shape of the residential lintel is changing to a more ambitious shape of opening. Architects are realising that they can fashion a unique window opening that will create the ultimate feature for any room.
An example of a smaller, family-owned, lintels manufacturers is Naylor, chaired by Edward Naylor. Although essentially a concrete lintel manufacturer, they are very focussed as a business on specials.
Naylor’s turnover from that particular niche now represents 35% of their lintels business, having grown from 26% in 2004 according to sales manager Paul Wood. Naylor attribute this to their successful strategy of targeting the specifier at the early stage of the design process. The company are well-known for their fire resistant and ‘fair-faced’ specials which are designed for public view, for example at football stadia.
Another smaller lintels manufacturer is Stressline. Owned by the Fox family, the Market looks for something special, the company have a £10m turnover of which 50% is down to lintels. Sales and marketing manager Richard Smith agrees that specials are a growth sector, more so than standard lintels because "more architects are trying to design individuality into properties".
Lead times on specials are critical as, by definition, they are all made to order. Customers expect delivery in seven to 14 days, so the time it takes to provide the quotation and drawings is a key factor in determining which supplier house builders and merchants will use. By placing more emphasis on service levels, lintels manufacturers are able to make better margins on specials than on standard lintels.
Research conducted this summer by TSW amongst builders and builders merchants branches confirms that, generally, there is a high level of satisfaction with lead times offered by the industry. Sixty per cent of the respondents scored their supplier of specials as excellent or good.
The majority of the sample (63%) also believe they are receiving good value for money, which endorses manufacturers’ strategies to add value to the market and to distance lintels from their commodity roots.
From the evidence of the customer research, builders merchants are much more brand led than house builders. Just over half the merchants sample (52%) felt that a particular lintels brand was superior, whereas only 29% of builders felt that way. Clearly, house builders are much more price conscious and this is reflected in the dual pricing strategies adopted by a number of the leading manufacturers.
Customer brand preferences appear to be based more on esoteric factors such as service levels, brand perception and colour, rather than specific technical benefits such as corrosion protection.
Keystone enhance their brand through expert merchant staff training. Keystone Lintels are the industry’s first and only steel lintel manufacturer to introduce online merchant e-learning for merchant staff. The state-of-theart learning base is accessed via online academies currently hosted on the BMF website, and available to NMBS Members.
Technical support is critical in this market and customers expect it to be provided free of charge. Keystone lead the way, with a technical support team of over 20 professionally-qualified engineers giving expert advice on lintel scheduling and dealing with telephone enquiries. This is supported by a team of 14 sales managers on the road who conduct frequent site visits and proactively engage in ‘back selling’ with builders merchants.
Catnic too have a strong 12- person team of technical services engineers, while Naylor rely more on their website, described as "extremely important", supporting the advice given at specification stage.
Both Keystone and Naylor are disaffected with major exhibitions such as Interbuild, with Keystone preferring to deploy resources at self-build shows aimed at local builders, supported by personalised direct mail to builders merchants. Both Keystone and Naylor also support RIBA’s Continuous Professional Development programme, with Keystone being the only lintel manufacturer to offer CPD Online.
Catnic’s marketing programme is geared towards supporting their strong brand within the merchant distribution channel. A new feature on their website drives end customers to Catnic stockists.
The major technical development driven by UK building regulations is wider cavity lintels. Keystone report that the UK market has moved from 50mm cavities 10 years ago to 70mm and now to 90mm, with the capability to provide wide cavity lintels up to 165mm.
Legislation continues to move on, and the environmental performance of the building includes the consideration of cold bridging measurements across lintels. Keystone’s thermal break plate is designed to negate the effects of cold bridging. This innovative lintel was invented and patented by Keystone to add rigidity and structural efficiency to the product, whilst achieving the highest possible thermal performance.
Catnic are also responding to the building regulations, as Boyles explains:
We’ve seen a reduction in the demand for 50mm cavity products and a dramatic increase in the demand for 90mm. We’re just about to launch a 110mm cavity lintel to suit severe exposure areas, predominately on the west coast of the UK.
It is not only manufacturing that is contracting. The number of buying points is also reducing as purchasing power is concentrated into fewer hands and more specialised channels to market open up, such as Buildbase Civils & Lintels – a specialist division within the Buildbase group. Steel lintels manufacturers have clearly had to up their game to meet the needs of more demanding professional buyers but, on the evidence of this research, they are rising to the challenge.