Credit Crunch Will Hit Sign Industry
15 August 2008
The boss of one of the UK's leading sign companies says the credit crunch will lead to a dramatic increase in company failures in the sign industry.
Steve Martin, Managing Director of sign installation and maintenance company Xmo Strata, and author of a highly critical book on the sign industry, says that firms with poor management skills, ineffective financial controls and low levels of training and quality could face a bleak future.
He is warning customers to be particularly diligent about credit checks (using services such as www.creditsafeuk.com) if they want to avoid the risk of a supplier going out of business before a project has been completed.
“Some of these companies were picking up large numbers of County Court Judgements (CCJs) even when the economy was booming,” he said. “In a small company, with low levels of bureaucracy, there is no excuse at all for picking up six to eight CCJs in a month, which some of them have been doing. That must sound a very loud warning bell for customers that they should look pretty closely at the company's financials before commissioning it to do work.
“Diesel has increased by 48% since June 2005, according to the AA. Information from the London Metal Exchange says that the price of aluminium has risen by 86% in the same period, and we believe acrylic prices have gone up by around 30%.
“This is having a real affect on the sign industry - just do a simple credit check on a sample of sign firms and you'll find many of them have a lot of CCJs, and an increasing number have had their credit rating suspended.”
Mr Martin is the author of Safety Quality Tricks and Lies: dirty tricks in the British sign industry and 100 questions your sign company doesn't want you to ask. He says sign companies are frequently owned and run by people with virtually no management training and no real understanding of how to achieve profitability, which accounts for the very high turn over of companies in the industry.
“The lesson for customers is simple: do the credit checks and find out before committing to doing business with a company. If you have a supplier that you've been using for a while, it might be a good idea to credit check them as well. No well-directed company would have any problem with that. They may not be doing as well as they were in the boom times, which is understandable - but if their credit rating has dropped alarmingly, they are picking up CCJs, or they are late filing their accounts, you have cause to ask some penetrating questions. The cost of change mid-way through a high profile project can be very high.”