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MacGregor Flooring MD: Some manufacturers playing a risky game with price increases

In an exclusive interview with CFJ, to be published in May, Kenny Smith, MacGregor Flooring’s managing director, says some manufacturers have taken advantage of the price increases that have followed the Ukraine war.

In the wide-ranging interview, Kenny’s views on profiteering from some manufacturers will cause many to take note. ‘It pains me to say that but prices going up owing to energy surcharges makes me think many businesses are profiteering off the back of it, which is disappointing. Fair enough, the cost of raw materials has increased, meaning companies have to procure them from somewhere else which is expensive, and at a personal level we know our household bills are up but I believe there are certain companies which have said: ‘Let’s use this to make some profit,’ although I won’t name names.’

And Kenny isn’t just talking about the flooring industry: on a global level, he sees indiscriminate increases as leading to a self-fulfilling prophecy: ‘If you put your prices up, your clients then put their prices up, and so it goes on. I suspect those companies which have profiteered will find that when things get back to normal that won’t be forgotten.’

Kenny isn’t just sounding off – he’s put his money where his mouth is. ‘I’ve had manufacturers here and I’ve said: ‘You’re playing a risky game. It’s about respect and if you do that to me once, you won’t get to do it again’.’

That said, Kenny isn’t unsympathetic to the challenges faced by manufacturers. At one point the screed & DPM manufacturer which MacGregor uses wasn’t getting screed from Italy, where it’s made, so for a couple of weeks Kenny used another manufacturer’s product.

I press Kenny on which companies he’s referring to but he’s too canny to get into the weeds with a journalist. ‘The problematic ones are the carpet tile manufacturers,’ is all he’s prepared to offer. ‘To be fair, maybe some components they need to manufacture their products have taken a hit, or maybe it’s the vacuum that’s been created by the supply chain crisis.’

In the interview, Kenny also addresses the industry’s labour shortages, the effects of Brexit, Covid-19 and spiralling inflation, and offers readers a peek into his crystal ball. ‘Over the next two years, small contractors who’ve relied on residential work, such as the ones doing the likes of herringbone in private homes and getting paid a fortune for it won’t have it as good as they’ve had it in the recent past. That’s cause for concern for them. Fortunately, we’ve not done domestic work over the past five years so I’m filled with confidence about the future.’

The state of the economy could impact flooring contractors’ contracts, he says, adding that the economy is his ‘big worry’. ‘It depends what happens with government; if it cuts spending on infrastructure that’ll affect 95% of big contracts with NHS, schools, the ministry of defence etc – all paid for out of the public purse. So if there are cuts, there’ll be less work to go around and it’ll be survival of the fittest. I think we’re at the top of the food chain when it comes to it but we can’t be complacent. We’ve got to keep working. And we have the capacity to even more than we’re doing now – if we had the people to back it up. So while I’m confident we’ll be okay, I’m fearful for the industry in general.’

With respect to labour shortages and apprentices, Kenny says: ‘Our floorlayers are employed full-time by us, we rarely lose any of them, and that works for us. But the problem is they’re getting older and I’m seriously concerned about the future. The average age of our floorlayers is frightening.’

Particularly concerning is the fact MacGregor has that high average age despite being a trailblazer at employing apprentices. ‘We usually get at least one apprentice a year and often more but all we’re doing is replacing the guys who are retiring which means no surplus is being built.’

  • For the full interview, make sure you get your May edition of CFJ
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