Are you thinking of the future?

Cornwall Group’s Chairman, Mark Mitchell, explains why ‘profit’ is not a dirty word.

Cornwall Group is a family-run business, which means we aren’t driven by accountants aiming to maximize profit over a short period. Instead, we reinvest profits back into our four multi-site businesses – Cornwall Glass Manufacturing, Cornwall Glass & Glazing, Mackenzies, and Forward Glass – by investing in machinery, transport, and people.

This is why the budget in October sits uneasily with me. It could negatively impact the economic recovery we are all planning for in 2025 if other businesses see their bottom line shrinking.

I understand that raising taxes is important, especially if that money will be invested back into major projects that we can all benefit from. However, businesses cannot simply turn on a sixpence when demand picks up again. Taxing employment rather than profit could reduce businesses’ ability to invest in their operations to meet an uptick in demand.

After 18 months of little or no growth, many companies have cut back their operations, including staff, and may have delayed capital expenditure decisions until the market improves. If those businesses are managed by an investment firm, then a healthy dividend will also be expected, putting further pressure on profits.

Increasing employers’ NICs has the double whammy of reducing the available profit that can be used for future investment while dissuading firms from employing skilled workers (exacerbated by the 6.7% increase in the National Living Wage), at a time when employing and training new entrants is vital for the health of the glass industry.

If this budget were announced in 18 months’ time, maybe it wouldn’t have hit such a nerve. But while we expect market conditions to pick up in 2025, it is far from guaranteed.

We believe Cornwall Group is well-positioned to supply leading products at volume as trading conditions improve because we’ve continued to invest while the market has been quiet. We don’t invest for today; we invest for tomorrow.

This is why we have three toughening furnaces from Glaston on order, with the first due to be installed at Forward Glass in spring 2025. This represents an investment of around £3m.

We also continue to invest in our colleagues by developing bespoke courses to train the next generation of glass professionals, and our apprenticeship program is active across all our sites from Cornwall to Birmingham.

This is where our profits go, and it is why we are not afraid to post healthy accounts at the end of our financial year.

But going into 2025, maintaining healthy profits is going to be difficult for everyone in the supply chain. I’ve already discussed the pressures of the Budget, but the industry is awash with cheap foreign glass at the moment, which is limiting glass manufacturers’ ability to build in margin.

If they aren’t making money, will they continue to manufacture glass on these shores? And if operations are closed, how will this affect market supply?

I believe there is about a third more glass in the UK than we need. That isn’t a great position to be in because glass production isn’t something you can simply pause until conditions improve.

If a float line were to close, there is currently enough glass in the system to cope with an increase in demand in 2025, and Cornwall Group is well-positioned to increase glass product supply as and when that happens.

We shouldn’t be embarrassed by healthy profits, but we should aim to create them based on the quality of our own product or service offering, not by squeezing our suppliers. Because if they can’t invest in their own operations, that relationship will be short-lived.

Suppliers who invest for tomorrow will ultimately provide the bedrock for our business’s success.