The UK Panel Builders Market returns to growth

The UK panel builders’ market was estimated to be worth £540 million at manufacturers’ selling prices in 2014. Market growth is driven by a strong performance in specialist sectors, an improvement in private sector construction and a generally more favourable economic climate.

The UK panel builders’ market was relatively stable prior to the recession with growth levels averaging around 1-2% per annum, but declined by more than 15% between 2008 and 2010, reflecting the poor performance of a number of product and end user groups during the recession. However, some sectors were sustained by exports and construction output in the public sector in particular remained strong during this period and was boosted again in 2011 by government spending, ahead of budget cuts.

Factors supporting the market include growth in specialist markets, such as hazardous environments, as a result of tightening regulations, evolution of environmental legislation and investment in development of oil, gas and renewable energy sectors. Factors negatively affecting market growth include public sector spending cuts, rationalisation of manufacturing capacity and increasing competition for projects driving down prices.

Key end use markets include industrial and manufacturing, water and sewage, power generation, oil, gas and marine, construction and transport. Power distribution panels represent the largest product sector at over half of the market value, followed by motor and process controls and building control systems. Safety, security and other panels make up the remainder of the market. Panel builders primarily source components direct from manufacturers, either externally or internally from a subsidiary within the same group.

Product development is primarily concerned with quick installation, reduced maintenance, environmental factors and health and safety, motivating demand for more sophisticated products which can withstand hazardous environments.

Current indications are that the UK panel builders’ market turned a corner in 2014 as private sector construction improved, however, the market is expected to maintain moderate growth levels, reaching an estimated value of £620 million by 2018.

“Refurbishment and development of the power generation asset base will provide opportunities for panel builders as well as focusing on renewable energy generation” said Keith Taylor, Director of AMA Research. “Investment in advanced manufacturing and also related R&D in the UK is likely to continue to stimulate investment in capital projects with positive implications for the UK panel building industry in the medium to longer term. Increased focus on infrastructure projects and development in the rail sector is also likely to benefit the sector.”

Factors supporting growth include improvement in the construction industry generally and in the industrial and infrastructure sub-sectors, in particular rail with government strategy to make continued use of ‘cascaded’ modern electric rolling stock and to link these developments in with the HS2 corridor. Other supporting factors include growth in the pharmaceutical / chemical, advanced manufacturing sectors, composites and further development of the IT and datacentre sector stimulating the panel building market. These factors may be balanced by ongoing capital spending cuts in the public sector, though this situation will be determined by the next government.

Health and safety, environmental and energy efficiency legislation is likely to continue to influence long term demand and the continued focus on environmental concerns and the need to reduce operating costs will benefit the automation sector including panels and components.

There has been some increase in outsourcing of part of the panel building manufacture, usually overseas, in order to reduce costs and streamline internal operations. This trend is expected to continue over the next few years as panel builders seek further ways of improving their build efficiencies. Product development has resulted in panels becoming smaller and more streamlined with quicker fit solutions and more standardised components. This is likely to see panels becoming more standard and modular, in turn containing more modular components.

The ‘Panel Builders Market Report – UK 2015-2019 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 01242 235724.