The electrical contractors market was estimated to be valued at around £18.2bn in 2013, having seen moderate levels of growth since 2011, according to a report published last month by AMA Research. Growth rates are forecast to improve from 2014 onwards, although the market will remain competitive with profit margins under continued pressure.
While electrical contracting is thought to
have been less affected than some other areas within the construction industry
during the recession, the electrical contractor market declined in 2009/10. In
2011, increasing raw material prices provided a boost to the market in terms of
value. However, this was offset to a great extent by weak demand in the private
sector and the government’s spending cuts taking effect, and the growth rate
seen in 2011 could not be sustained, leading to a flat market performance in
are more positive, and point to a return to growth from 2013 onwards. Business
confidence has been higher during the year and there have been some positive
signs that the economy could finally be recovering from the downturn.
remains fierce among contractors, with reports of businesses continuing to
submit tenders at, or below, cost price in order to secure work or retain
clients. Profit margins, which were already under pressure, have declined
further. Consolidation activity amongst suppliers continues to be high within
the market. This has led to a number of major players increasing in size over
the past few years. The growth in strategic acquisitions is also in response to
the growing focus on integrated services within the sector, with contractors
widening the range of services offered.
A key area of growth
in recent years has been installations aimed at improving energy efficiency and
reducing carbon emissions, driven by increasingly stringent legislation and
regulations around this, but also given impetus by the long-term cost savings
that can be made by installing such systems, driven by increasing fuel costs.
prospects for the sector are moderately positive, with the electrical
contracting market expected to show growth of around 3% per annum over the next
few years. However, this depends largely on the performance of the non-domestic
and domestic construction sectors. The housing sector is one of the key sectors
likely to underpin growth within the electrical contracting market over the
next few years, as demand for new housing is constantly increasing.
Taylor, Director of AMA Research, said “Growth
in the future is also likely to be motivated by legislation around carbon
reduction, and renewable energy in particular. Solar panel installation
currently represents a fast growing sub-sector of the electrical contracting
market. A shift to LED lighting should have an impact on the market and data
centres also remain a potential source of growth.”
indicate that the market may reach £20.6bn by the end of 2018, providing the
economic climate continues to improve.
The ‘Electrical Contractors Market Report -
2014-2018 Analysis’ report is published by AMA Research, a leading provider
of market research and consultancy services within the construction and home
improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling