Terry Parker: merchants who have the best trained staff will be the winners when business comes back.
Leading by example
Published: 21 May, 2010
Being part of a national association can be a thankless task. You meet with government minsters and civil servants to champion the cause of your members. If successful, there is nothing to show for it because often it is about stopping government from doing things. Terry Parker talks to Lisa Arcangeli about how the BMF has changed.
Terry Parker, the Builders’ Merchants Federation’s national chairman, can look at the industry with wise eyes. After all, he has worked in the merchant and distributor sector for over 40 years.
A former managing director of Tricom Supplies, the national lightside merchant specialising in plumbing and heating, he re-joined the Ridgeon Group – a merchant selling heating, sanitaryware, building materials, forest products and timber engineering - as its group managing director until his retirement in 2008.
“The BMF has changed almost beyond recognition in the last few years. We have a solid platform to build on: robust management systems overseen by a focused and enthusiastic board; a hugely experienced but small team, and a dynamic and growing membership feeding their needs and hopes into the organisation,” he said at the time of his appointment last September.
Since then, Mr Parker has been out and about meeting members staff and other organisations and talking about their business. And, what he has found may surprise you.
“Business for most merchants across the UK is not getting worse –or at least –not as fast as it was,” he says. “Some merchants have even seen small improvements. Some branches are doing well, while others even within the same company, are not.”
Mr Parker is philosophical. “It is not always bad news when some businesses disappear. Look at what happened with Woolworths. Those people who sold the things that Woolworths used to sell saw an uplift in their trade as a result of its closure.”
Over the next 18 months, Mr Parker believes business will be finely balanced. “There are two things that I think are waiting to clobber us. The General Election will task whoever is the victor with having to deal with the financial problems that the Government has. It will mean cuts. I would not expect trade to be buoyant regardless of our current difficulties. You never get boom time just before an election. The most unsatisfactory outcome would be a hung parliament limping along to another election.
“More unhelpful and a little further away, I believe by April next year, the banks will have to start repaying the money that the Government has pumped into them unless the rules get changed again. It doesn’t affect them equally, but the total supply of money around banks will start to shrink again. That will make borrowing money difficult for some sectors.
“Whether that means clamping down on mortgages or lending to small or big business...I would like to think the banks will halt the grandiose corporate finance schemes that take up so much of their capital and achieve so little.”
The merchants’ role is little understood by people at large and by MPs and civil servants in particular. “We constantly have to remind them that merchants make it possible for all the small works that are going on that are so much a part of the construction industry,” he points out.
“Merchants also provide a line of credit for a sizeable majority of their customers. Most builders, plumbers and heating engineers are financing their business by getting work, getting paid and then paying a merchant.
If they had to pay cash for everything, they would need extensive overdraft facilities because they would not be the type of customer banks would lend to. They are a low-cost source of finance.”
The Federation is continuing to make noises in all the right places about the distortion of the market that the Government is creating with its hastily thought out schemes. “In the main, these schemes have been promoted to Government by the energy companies,” he believes.
The BMF has several hot topics for government that deal with carbon reduction and energy saving. “The Government has some tough targets. For new housing it will achieve this just by tightening the Building Regulations. But, if you look 20 years ahead, by the time the deadlines are to be met, 90% of those houses will already have been built.
“The Government has further distorted the market with all the promotions from the energy companies which it has threatened with a large fine if they do not comply.
“Now the Government has moved on to insulation and the energy companies are muscling in on direct supply routes and offers through DIY stores, which may or may not go to into the DIY market as few checks are made as to where the products are sold.
“Merchants are getting squeezed out. That doesn’t matter when it comes to lightbulbs, as most merchants don’t sell them. Insulation is a different matter. It is hard to charge a customer £10 when the DIY price is £1 or less.”