Tony Marsh: Boom or bust?

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Is it curtains for the events industry or is 2011 set to be a prosperous year for outdoor events? Tony Marsh, president of MUTA, takes a look back at the 2010 temporary structures market and assesses just where it is heading

With the season now drawing to a close, the temporary structures industry is looking back at a somewhat mixed year and making preparations for what is shaping up to be a turbulent 2011. As president of the industry trade association, I have had the opportunity over recent months to speak to many fellow members on-site – as well as with the rest of our executive committee; their views and experiences present a complex picture of our sector at this time.

The economic recovery had a shaky start and GDP is still lower than 2008, a state of affairs felt by many within our sector and the wider events industry. Trading has been steady and there are many reports of improvements on 2009 but the loss of major events such as The Royal Show among others have left holes in hirers’ schedules, which cannot be filled overnight. Additionally, the bad weather of 2008 and 2009 has weakened other shows and events, reducing their spending power. Our members are also reporting that corporate hospitality has not yet bounced back to levels enjoyed before the recession.

Although the recession put many event firms out of business, it is still a highly competitive market with the downward pressure on prices creating difficult trading conditions for marquee hirers and their clients alike. In such a market, where it can be tempting to go with the supplier who quotes the lowest figure, customers should be wary of the quality of the service they are getting. Not all firms meet the health and safety standards set out by MUTA through the MUTAmarq accreditation scheme and clients should be aware of their increased risk and potential liability should something go wrong.

One major difficulty marquee hirers, like many other small businesses, have been facing, is the lack of credit. For MUTA members, the problem is particularly acute as banks are unwilling to accept hire assets as security for loans. The extent of the problem was revealed recently when Santander suggested that Financial Services Authority guidelines are causing banks to remove the discretion of local branch managers to make loans to small businesses. Despite government efforts to boost the supply of credit, the requirement on banks to minimise risk has led to a centralised lending policy that could deny loans to small businesses, which have always been viewed as robust by their bank manager. This revelation has caused such a stir that MPs on the Treasury Select Committee have vowed to investigate the claims.

Certain sections of the temporary structures industry are finding they have been more resilient to adverse trading conditions. There is a growing market for unusual structures – such as giant hat tipis – in the live event and private hire marketplaces. MUTA executive committee member Jon Parr, MD of The Stunning Tents Company, says business has been “very buoyant” this year, with “significant growth again” and even better prospects next year.

For many, however, 2011 is expected to be even more difficult. Exec member Cameron Stewart, MD of Field & Lawn, thinks George Osborne’s public spending cuts will have a knock-on effect on the temporary structures industry by taking a large chunk of cash out of the economy. Exactly where the cuts lie remains to be seen when the autumn spending review is published on October 20, but government events have already been earmarked as an area to make savings. The efforts to reduce the deficit will mean that banks will have more money that they can lend to the small and medium sized business, though there is still a long way to go before MUTA members can access the same levels of borrowing as before the credit crunch.

To prepare for further uncertainty our members are looking at ways to reduce their cost base in the low season, diversify their service and improve their flexibility. Simon Bell, technical director at Custom Covers, says it has been developing additional equipment for the hire trade, which is designed to work with the existing inventory – they are planning to exhibit these new products at the Showman’s Show.

Members were wary of conditions in 2010 and have generally been pleased with trading given the circumstances – in the face of further uncertainty there remains optimism that this experience will continue into 2011.