Looking after number one: new structure will mean quicker decision-making

Congratulations on your promotion. How should customers and the industry interpret the restructuring at Rehau?

Wolfgang Gorner: Rehau wants to get closer to its customers. A criticism levelled at us is in the past was that it was not evident who was in charge in the UK. A lot of customers had good relationships with Derek Wood, our Finance Director, or Martin Hitchin, Sales and Marketing Director for all our products, and there was myself in terms of Marketing for Windows. This re-organisation means that there is a separate business unit for Windows with a specific remit for product development.

The other big advantage that this should deliver is in bringing new products to the market and the speed in which we do that. Rehau has never been known to be a trailblazer in this area – we’ve tended to follow rather than lead. Looking at last year, we’ve had issues with our logistics side and all our efforts have been devoted to that, with no significant product launches or service initiatives.

This year we’ve planned a number of product and service initiatives and we recognise that we have to bring those to market as quickly as possible. Making the Windows Division its own business unit with separate technical and marketing elements together as one will speed that process. We’ve already started a campaign this year to communicate what these services initiatives will be. That will be rolled out at Glassex, and the ultimate results will be judged by the market. We are quietly confident about the benefit these will bring to existing customers and, very importantly, to customers who are thinking of changing to another systems house.

I feel in the market at the moment there are a lot of uncertain companies out there. ‘Am I with the right systems house? Should I be with somebody different?’ The market is changing. It’s getting tighter, particularly on the trade side, and there are different types of market that customers want to serve.

Rehau is now widely acknowledged as the UK Number One for PVC-U window systems. How do you feel about this achievement?

We have got to Number One partly through our own and our customers’ efforts but also due to the general market conditions. Other companies too have benefited from these, but we have worked hard at trying to gain new business and in encouraging our customers to seek new business.

We still expect to squeeze some growth out of the UK market for the next two or three years – we haven’t seen the saturation that we’ve seen in other countries.

The Rehau brand does appear to be very strong. Also, it’s been said that it’s very hard to convert a Rehau customer.

There is fantastic brand recognition and there is this amazing brand strength as well. Despite the service issues we had last year, customers still buy the product and see that they can grow their businesses with it. We can’t get complacent. We work very closely with our customer base in terms of identifying the opportunities and working with them to bring something to the market. We have to give customers the right products, when they want them and at the right price, because that brand strength can be eroded, we’re fully aware of that. There are plenty of examples outside our industry of brands that have been right at the top and have fallen.

But our customers, and non-Rehau people recognise that a Rehau window sells in the domestic, commercial and newbuild markets. It’s recognised in all quarters.

Some installers have been fitting our product for over 15 years. They know it’s a product they can put in and very rarely get a call back with, so they can walk away and get on with the next job.

We still expect to squeeze some growth out of the UK market for the next two or three years

Do you feel any need to further expand your systems?

On the 60mm side we introduced Rehau-Tritec four years ago, which now gives all the options that most fabricators could actually want. In the past three years we’ve seen a big shift in the market away from 60mm to 70mm, and system houses have followed this. Our S706 product is still selling very strongly but we recognise that it doesn’t have a sculptured option. We will launch one later this year, and the addition of few other profiles will complete the system.

Was there some resistance to Rehau-Tritec from your fabricator base?

It was difficult to convince customers that the S702 60mm system had had its time. We had installers saying that they sold the S702 product very easily and never had any problems, and fabricators who were saying they were selling all the S702 they could make.

But the fabricators that initially got on board recognised that Rehau-Tritec was a better product, and there was far more choice, and they have achieved a lot more differentiation of product since they have switched to Rehau-Tritec.

We’re now down to the last few customers on S702, who predominantly need it to see out long-term commercial contracts.

Some of the most recent window launches have been no-frills systems aimed at the newbuild market. Are you going to follow suit?

I’m not saying that we don’t need that product, but a lot of people would be surprised by the success we’ve had in this sector, despite not having what you would call a newbuild window. The acceptance of PVC-U with housebuilders is very high now. The advantage now is that homebuyers expect to have that window in their new home because that’s what they had before, even to the extent that a lot of housebuilders will offer conservatories as an option. Housebuilders are also looking to differentiate themselves and whilst there’s a big market for a mass produced newbuild window you’ll find a lot of housebuilders now are looking to up-spec the window to differentiate themselves from a run-of-the-mill housebuilder.

You’d be surprised how many of our fabricators and installers have got in to newbuild. We didn’t actively promote that product into that part of the marketplace, but our customers are doing it.

Our S706 70mm system and Rehau-Tritec 60mm systems are equally suitable for the newbuild market. You might find as the housing market is tightening, yes they will look more at cost. Site management is another thing. Housebuilders tend to have national agreements but they tend to use local suppliers because they can cope with the vagaries of the process.

Are these dedicated installation companies or ones that fabricate as well?

It’s important for us to get them to recognise and exploit the Rehau brand. It’s strong. Ride on the back of it.

We’re seeing the typical trade fabricator getting larger and larger and then we’re seeing separate installation companies and that is all they do. There are few that do both. But what we are seeing with installers is they are having to up their game. They’ll expand and invest in showroom facilities and show a very professional image. Hence we’ve got this scheme where we get installation companies on board, introduce them to fabricators, and show them where they should be investing their marketing budget. It’s important for us to get them to recognise and exploit the Rehau brand. It’s strong. Ride on the back of it.

The first phase of updating our scheme for installers is our Marketing Handbook, which we are previewing at Glassex. This covers a wide variety of promotional tools including literature, showroom kits, and our showroom design service. We were one of the first to do a book. Other people match it and then you’ve got to raise the standard again. Things have moved on.

What changes are you seeing in your fabricator base?

In the past there have been fabricators who have been either 60 or 70mm. Now we have companies wanting to offer both systems because they are national companies and want to cater for regional variations – for example, 70mm seems more popular in the South East, Midlands, North and North West.

So we are trying to standardise componentry between systems to cut down on duplication.

How do you see the conservatory market developing and why are you working with Wendland?

The market has changed significantly in the last two years. In terms of potential sales for conservatories, it’s huge compared to the replacement window market. But the value of the fitted conservatory has dropped significantly. Maybe 10 years ago you were looking at over £10,000, now it’s just over £6,000. Buyers used to be the 50-somethings with plenty of money in the bank looking to make a significant investment on their property. Now they are 30-somethings who can’t afford to move and are looking to create some more space. The profile of the market and the people buying has changed completely.

The real changes will be in 2006 when all conservatories come under building control. Everyone will have to have a building control certificate for their conservatory and will have to prove that it is structurally sound. The big question mark is who takes on that liability, hence why we’re working with Wendland because we want to be in a position where we can say to our customers, here’s a conservatory solution which is structurally sound and competitively priced. They’ve got the products and the expertise, it’s all there.

Are there any other developments you can comment on?

We also have some developments under way in some of the lesser known product areas. We are pushing our curtain walling system very hard this year, to expand the market for our commercial fabricators. Our vertical slider has been a market-leading product for several years, attracting many competitors. We have looked hard at how we can improve our product and later on this year we shall make some announcements on that.

So, on the products side, a lot happening, and on the service side we are further strengthening our ties with installers. There are hundreds of installers out there and we are asking ourselves how we can improve their position in the market.