Merry Christmas from AMA Research

The team at AMA Research would like to thank all our clients for their custom in the past year. We have once again been busy with over 60 reports published to support our library of over 150 titles.

In addition, we have also undertaken a large number of varied client specific projects, ranging from detailed reviews of specific building products and materials to in-depth assessments of distribution markets, as well as Brexit impact reviews. In 2017, we plan to continue to improve our product and service offering and widen our range of reports, and early next year we also hope to launch a brand new website which comes with full e-commerce functionality.

Click here to read our review of the year and our predictions for 2017 for the building and construction industry. It has certainly been an interesting year with the EU referendum results and subsequent effect on the economy as a whole. At the time of writing, however, it seems market conditions are continuing to improve. We hope that this will benefit all our customers and wish everyone a Happy Christmas and a Prosperous New Year!

Please note that we are closed for business from 5pm on the 22nd December 2016 and will re- open on 3rd January 2017. We will process all orders and respond to any enquiries as soon as we are back from the Christmas break.

UK Construction market review 2016 and what lies ahead

As 2016 draws to a close it's worth reflecting on the changes the construction industry has seen over the last 12 months.

This time last year, confidence levels in the UK economy in general - and in construction activity in particular - were relatively buoyant. AMA's Forecast Bulletin in January 2016 indicated projected growth rates of 2.3% in GDP, with overall construction output forecast to grow by 5-6%. The EU Referendum was a distant landmark and most independent forecasts were for a vote to 'Remain', and that construction would make a positive contribution to prospects for the economy in 2016.

Housebuilding was regarded as one of the strongest sectors for growth, building on rising confidence levels, growth in real incomes and a range of Government support initiatives aimed at helping first -time buyers into the market. In the non-residential sector, infrastructure and office construction were forecast to be the most buoyant sectors for 2016 - each forecast to grow by around 7%.

However, the surprise result of the Referendum had an immediate impact on construction, with leading housebuilders' share prices falling dramatically the following day and the sector generally experiencing a loss of confidence. Fortunately, this didn't last too long and the last few months have seen something of a recovery across most sectors. Housebuilding volumes haven't fallen off a cliff and sales levels have recovered strongly with prospects for 2017 looking more buoyant than they were just a few short months ago. The political focus on increasing the number of new homes is continually rising, with the shortage of affordable housing now recognised as one of the major issues and set to drive a range of initiatives to increase output over the medium term.

As the chart above shows, our latest forecasts for 2016 indicate a modest increase in output, though more recent surveys have suggested that this may prove optimistic with a decline in some sectors impacting on overall output levels.

So, what are the prospects for 2017?

In a wider context – and in the light of the Brexit vote - forecasts for the economy in 2017 have been cut to around 1% growth in GDP. But, it’s worth emphasising that forecasts for 2016 were also initially cut in response to the Referendum and have proved too pessimistic, resulting in recent upward revisions to around 2.1%. Our current forecasts are for around 2% growth in overall construction output with the industry set to pass £150 billion in total value.

This forecast is built on a combination of modest growth in the housing market, while the non-residential sector is expected to experience mixed fortunes.

As the chart below shows, housing and infrastructure represent 2 major sectors of the construction industry, accounting for 41% and 19% respectively in the first 6 months of 2016. 

As indicated above, housebuilding has proved more buoyant than anticipated, while infrastructure spending has also risen up the political agenda. Lack of investment in infrastructure is regarded as a barrier to growth in the economy and, while uncertainty still surrounds major projects such as HS2, Hinkley Point and a new airport runway in the South East, the overall level of investment in energy and transport infrastructure is set to rise and should contribute to steady rates of growth in construction output.

As for the medium term, the underlying performance of the economy - together with consumer and business confidence levels – will be the key drivers of construction activity. Undoubtedly, the Brexit vote and negotiations will continue to cast a shadow over the next 2-3 years at least, but as the last 6 months have already proved the construction sector has proved more resilient than anticipated and the sector remains a good target for Government support and initiatives to help underpin the UK economy.

Best Wishes for 2017 from all at AMA Research! 

Steady growth overall in the UK upholstered furniture and beds sectors

The UK upholstered furniture and beds market has shown good growth in recent years of around 3-4% per annum until 2015, with a further increase of around 3% expected in 2016. According to a new report by AMA Research, reasons for the market increasing steadily in the 2012-15 period, include an improving UK economy, rising consumer confidence and an increase in sales of higher value products.  

In the upholstered furniture sector, sales of single sofas and convertibles represent an important part of the upholstered furniture market, while armchairs sold separately account for smaller share. Modular, corner, U Shaped sofas are gaining share. These flexible designs are suited to open plan living and are adaptable to different spaces. The share accounted for by leather has declined marginally over the last 3-5 years, with the wide range of colours and styles supporting the growth of the fabric sector.

During the last 5 years, there has been a marked trend towards double beds and, in particular, to king sized beds. This growth is largely attributed partly to the high level of price competition within the market, particularly in the bedstead sector. Growth in the mattress sector has been underpinned by increased demand for higher value pocket sprung mattresses, along with the growing popularity of other materials, such as memory foam. Demand for divan sets has fallen steadily due to growth in demand for mattresses, either sold separately as a replacement purchase or together with bedsteads, including wooden, upholstered and metal bedsteads.

The supply structure of the upholstered furniture market has not changed dramatically in recent years, though the major suppliers have increased their overall share of the market. The furniture multiples continue to dominate the distribution of upholstered furniture, with multiple specialists such as DFS, ScS and Sofology accounting for a significant share, along with general furniture multiples, such as IKEA, Harveys and Furniture Village, and department stores/variety chains. Imports of upholstered furniture have increased in the 2012-15 period to reach around 45% of the market by value, with imports from China now accounting for the major share.

The beds sector is more concentrated in terms of suppliers compared with the upholstered furniture market, however, in recent months there has been considerable activity in the mattress sector, with newer entrants specialising in offering a compact range of products, often via the internet and available for early delivery.

While forecasts for the UK economy in 2016 have recently been upgraded slightly by the major forecasting institutions, the uncertainty surrounding Brexit and the current high levels of indebtedness for many people is likely to impact consumer confidence. The rate of growth until 2020 is expected to be lower than in the last few years. While the upholstered furniture and beds sectors are relatively mature, a growing demand for housing should stimulate market growth. Mattresses are one specific area of the beds market where opportunities for further value growth exist, with relatively short replacement cycles and consumers trading up to higher quality products.

“The popularity of modern and contemporary furniture seems to favour alternative furniture combinations, rather than the traditional 3-piece suites” said Hayley Thornley, Research Manager at AMA Research. “Other trends include flexible and modular furniture options to allow for open plan living areas and awkward spaces. This is also reflected in the range of design options now offered, including corner sofas, u-shaped sofas and chaise sofas.”

The ‘Upholstered Furniture and Beds Market Report – UK 2016-2020 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.

Online sales of garden products in the UK have doubled since 2011

Growth in online sales of gardening products have outpaced the overall garden products market by some distance in recent years. Reasons for this has included the continued penetration of broadband internet services and mobile devices, as well as the expanding number of companies which now compete in the online sector. Between 2011 and 2015, Internet sales of garden products more than doubled, with the sector growing by an estimated 24% in 2015 – with growth of a further 20% estimated for 2016.

Segmentation of the internet garden products sector differs from the market as a whole. Garden leisure products accounted for the largest share of ‘internet garden product sales via the Internet at around 30%, followed by horticulture and garden equipment - this compares to the total garden products market where horticulture takes the leading share. Both the internet sector and the overall market have benefited from the fact that more people are keen to use their gardens for entertaining and socialising. This trend has pushed up demand in sectors such as garden furniture, barbecues and decorative garden features in particular.

It is estimated that ‘non-specialist’ garden retailers such as DIY multiples account for the majority share of internet garden sales in 2015-16. However, competition continues to grow within the overall category, as a number of grocery multiples and high street retailers have recently increased their presence in the market. The garden centres sector has been slower than others in adopting online sales platforms, but this is now beginning to change. In addition, there are a range of specialist online retailers in key sectors, accounting for around 40% of the market.

Growth within the overall market for garden products is likely to be fairly restrained in the medium term. However, more impressive growth is forecast for the internet sector, which is less mature and at an earlier stage of development.

“By 2020, it is expected that the internet sector will account for over 18% of the total garden products distribution market and will have grown by more than 55% compared with 2016 levels” said Andrew Hartley, Director of AMA Research. “While impressive, market growth is expected to slow during the years leading up to 2020, as the sector starts to mature.”

Ultimately, internet sales of garden products will depend upon demand within the overall market. Future growth rates are expected to vary between sectors, reflecting factors such as varying levels of maturity, replacement frequencies and consumer tastes and fashions. Between 2018 and 2020, AMA Research expects the overall growth rate to have slowed to 10-12% per annum.

The ‘Internet Garden Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience in 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.

Positive growth prospects in the medium term for European Builders Merchants market

The total European builders merchants market grew by around 4% in 2015 with further growth of 2% expected in 2016, according to a newly released report by AMA Research. This new report reviews the builders merchants markets in 12 European countries (excluding the UK) and looks at construction and economic indicators, as well as identifying the key merchants groups/organisations operating in each of the 12 countries. Estimated at around €109bn in 2015, growth of around 2% is currently indicated for the European builders merchants market in 2016. However, there are significant differences between the 12 countries in terms of the merchants market structure, as well as distribution of lightside and heavyside building products.

In terms of contribution to GDP, construction output varies considerably between the countries reviewed - ranging from as low as 6-7% to highs of around 16-18% - with a typical overall average of 8-10%. Construction output has been extremely volatile in some countries over the last decade - notably Ireland, Spain and Portugal – and, in overall terms, has not recovered to 2007 levels across the leading 12 EU countries reviewed.

Growth in the overall builders merchants market across the 12 countries is forecast to be slightly lower in 2016-17. Though the market size has increased year on year since 2013, it is still below the peak achieved in 2007-08, and while the above figures at an overall level indicate a degree of stability in recent years, this conceals a relatively high degree of volatility at individual country level.

Germany has provided one of the more stable construction sectors in recent years avoiding the significant swings in activity levels that have typified market performance in many other countries. In addition, Germany also has high specification standards in most products, which has helped underpin the €30 billion building merchants market. France and Italy have performed less well in recent years, but remain significant markets - France underpinned by a strong housebuilding sector, while Italy has a stronger refurbishment market.

In recent years, there has been significant activity among buying groups with expansion and mergers/co-operations within national boundaries, as well as the development of pan-European links and some consolidation amongst the merchants. Three key multi-national groups are significant in the overall European market: Saint-Gobain, whose building materials distribution division claims to be the European leader in building materials distribution; Wolseley the UK based company which claims to be the world’s largest specialist trade distributor of heating and plumbing products and CRH, the Irish building materials group.

“Despite the current difficult climate, the 12 markets under review are also likely to see further rationalisation over the longer term, though inevitably further consolidation in some countries is likely to come up against competition barriers” said Andrew Hartley, Director of AMA Research. “As well as structural changes in distribution, the markets are also likely to see further rationalisation of supply chains, as major international groups expand their building material interests across different products and markets.”

2016 is expected to be a relatively difficult year, with many countries experiencing marginal growth at best. Government spending levels across most EU countries are still under pressure to keep within EU guidelines and, inevitably, public sector construction works are a target for budget cuts and this will continue to feed through into the builders merchants markets in some countries. In addition, new housing output is likely to be impacted as consumer spending and confidence levels fall. Repairs/maintenance works typically also depends on consumer confidence which remains relatively fragile across most major European economies in late-2016. However, into the medium term, prospects for growth are more positive.

The ‘Builders Merchants Market Report - Europe 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The full report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724. In addition, also on offer are reviews of the 12 individual countries and a separate review of the builders’ merchants market is also available by contacting AMA Research directly.

Competitive UK generator hire market continues to grow in 2016

AMA Research have published a new report on the UK Generator Hire market, reviewing market size, product and application trends, forecasts and supply structure in the diesel generator hire sector. Hiring of generators and support services is a substantial market and has experienced particularly good growth since 2012. In 2015, it is estimated that the market grew by around 7% in value terms, with a further 4% growth forecast in 2016.

The hire of generators is well-established in the UK and reflects the need for temporary, emergency or back-up power in a wide range of applications. Given this diversity of applications, the performance of the UK economy has a direct impact on the level of generator hire demand, reflecting trends in both construction and non-construction activity.

Demand tends to be relatively closely aligned to GDP, with short term fluctuations influenced by construction downturns and recovery, while other key factors impacting on demand include emergencies - in particular flooding in recent years - and major events, such as the Olympics, Glastonbury etc. In addition, rising power demand is a key driver in several major sectors, such as events and industrial, with more ‘critical’ applications also requiring more back-up support.

By volume, generators with a rating up to 20 kVA account for around a third of the market, with the 21-350kVA category accounting for a larger share. The latter are typically used in construction and events, as well as small offices, industrial units or hospital departments etc. Construction accounts for the largest ‘end-user’ share followed by the industrial sector, with infrastructure and events also important sectors for generator hire.

Within the overall generator hire market, ancillary products represent a significant value added element to the overall contract value, though requirements for ancillary products/services vary considerably depending on the location, application, additional elements required, generator size etc.

“The market has continued to grow in 2016 but, following the Brexit decision in June, growth rates are more cautious but underlying prospects remain strong” said Andrew Hartley, Director of AMA Research. “However, the underlying trend remains positive and there is substantial optimism in late-2016 within the generator hire sector for steady growth of around 4-5% which is expected to continue going forward.”

Contributing factors to steady growth include a combination of generally rising levels of electricity consumption, concerns over grid capacity and reliability, more infrastructure projects and developments in remote locations, such as wind farms and nuclear energy, while the growing events sector provides good opportunities for temporary power hire.

The ‘Generator Hire Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience 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.

Domestic Window Coverings - UK 2016-2020 - Key Facts

• The UK window coverings market is worth over £1.5 billion at retail prices.
• Curtains and blinds account for over 75% of the market but shutters represent the fastest growing sector and is now a substantial sector.
• Key suppliers vary between product sectors, with the overall market relatively fragmented.
• Mail order/internet now accounts for over 30% of the market with department stores and specialists/independents also leading channel at over 20% share.
• The sector is mature, though shutters are forecast to experience strong growth in the next 2-3 years.

These facts have been extracted from AMA Research's report 'Domestic Window Coverings Market Report - UK 2016-2020 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724

Plant Hire - UK 2016-2020 - Key Facts

• The UK plant hire market grew by over 15% over 2013-2015.
• The top 5 hire companies account for around 25% of the market.
• Earth moving and lifting equipment are the 2 largest product sectors with over 60% of the market. 
• Generators are a growing sector.
• Market prospects to 2020 are optimistic, but the EU referendum may impact on future growth rates.

These facts have been extracted from AMA Research's report 'Plant Hire Market Report - UK 2016-2020 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724

Modest forecast for the UK wall cladding market following Brexit decision

UK market for wall cladding has increased by around 18% in total between 2012 and 2015/16, driven by strong growth in new build and major refurbishment activity in key sectors, such as housebuilding, offices, schools & higher education, hotels & leisure, transport buildings and online retail warehousing. The range of cladding types is broad and the supply chain diversified and fragmented, and demand for the various cladding types tends to vary depending on the relative buoyancy of their main end-use markets.

Construction output in 2013 and 2014 was helped by the relatively good summer weather, with private housebuilding, social housing refurbishment, waste management infrastructure and the Central London office development sub-sector all showing solid growth. With improving levels of housebuilding output, driven largely by the Help to Buy scheme and a shift back from flats to houses, demand for facing bricks outpaced supply, with imports needed to make up the shortfalls. However, by 2015, UK brick deliveries improved, so driving up completions.

Energy efficiency legislation and initiatives (e.g. ECO) and requirements of Part L of the Building Regulations have driven up demand for cladding products and systems with higher energy efficiency properties e.g. render coated external wall insulation systems and composite panels. The wetter than average weather in the summer of 2015 did, however, appear to hold back the overall rate of growth in demand for bricks and certain other cladding products. Overall, the market has not grown significantly in volume terms since 2014.

Clay facing bricks constitute the largest product group, with demand recently having been driven up by increasing housing output. Other main types of cladding used on housing included cast stone, timber/weatherboarding and render on blockwork and EWI. Clay facing bricks are also used on non-domestic applications, but demand in key areas, in particular out-of-town retail new build, has constrained growth rates here.

In the commercial sector, the return to growth in office development and high end apartment blocks in key city locations has largely underpinned demand for curtain wall and rainscreen cladding systems. In the industrial sector steel and aluminium profiled and composite wall panels typically dominate demand for cladding, key areas of use being warehousing, out-of-town retail ‘sheds’, waste management and utilities facilities and factories. The impact of the recession on the retail and industrial sectors had reduced demand for metal cladding, but demand has recovered driven by increasing demand for online retail warehousing, data centres and energy-from-waste plants.

“Forecasts for lower growth from 2017 are mainly driven by uncertainty following the ‘Brexit’ referendum” said Keith Taylor, Director of AMA Research. “Although modest annual growth levels are currently forecast to 2020, the medium-term outlook will be dependent upon the path taken to exit the EU and the type of trade and legislative deals formulated.”

Over the period ending March 2019, when Britain is scheduled to leave the EU, at the very least, the uncertainty created by the situation is likely to create more volatility in the construction market at large. As a result, our view is that demand for cladding will decline modestly during this time in volume terms. Our reasons for this view are due to lack of confidence among property investors and business owners, a weakening of Sterling against the Euro and the US dollar and endemic problems concerning skills shortages in key areas. Other factors that are expected to contribute towards slower growth include the cutting or ending of subsidies for certain products and development programmes. For example, the government’s Energy Company Obligation – to help with installing energy efficiency measures for the less well off – is to expire next April.

The ‘Wall Cladding Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience 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.

Smart heating controls drive growth in the UK central heating market

UK domestic central heating market is substantial, with an estimated total value of around £1.1bn at manufacturers’ prices in 2015. The market saw a notable increase in 2013, with demand in 2014 also reasonably positive, though performance has been more subdued in 2015/16, reflecting the withdrawal of the ECO scheme and the Green Deal, which has affected boiler sales in particular. However, the market has benefitted from the growth of smart heating controls in the past 2-3 years and demand from the housebuilding sector has continued to increase.

While the market is mature with central heating installed in around 92% of UK homes, growth potential still exists, particularly through smart heating innovation, used to improve energy efficiency and control. The UK domestic central heating market has also benefited in recent years from increasing health and safety regulations, revised building regulations and environmental legislation. This has stimulated product innovation and development in all sectors of the market.

The widespread introduction of smart heating controls has also supported demand, with all of the Big 6 energy companies having added a smart thermostat to their home energy management portfolio. UK householders are becoming much more environmentally aware and are looking towards smart heating solutions in order to minimise energy usage and to save money. Factors which have limited opportunities for growth include the continuing trend towards greater levels of property insulation, driven by further 2014 revisions to Part L of the Building Regulations, which have tended to reduce the overall heating load.

The boiler sector dominates the product mix with around 60% of sales, followed by radiators, conventional heating controls and circulator pumps, with smart heating controls accounting for a smaller but growing share. With central heating now being mature, the largest application area is refurbishment/replacement with around 80%, while new build and first time installations account for a relatively small share of the market. The majority of products are therefore distributed via trade channels such as merchants and electrical wholesalers. However, DIY multiples and online retailers are also important distribution channels, and an increasing amount of products are sold via energy companies and into OEMs.

Keith Taylor, Director of AMA Research said: “The future performance of the UK domestic heating market will be influenced by overall trends in housebuilding, home improvement, fuel prices, energy efficiency legislation, renewable technologies, and technological developments. With the evolving trend towards smart IoT devices in the home, the development of smart heating controls will have a significant impact on the overall domestic central heating market.”

There also continues to be significant opportunities to upgrade existing boilers to the more fuel-efficient condensing models. Around 40% of all boilers installed in the UK are non-condensing models. However, there will still be many homeowners who will continue to demand more conventional solutions. Real benefits such as ease of use and convenience will continue to be the primary focus of many conventional heating controls suppliers.

The outlook for the UK domestic central heating market in late 2016 remains relatively flat, with an uncertain UK economy following the UK ‘Brexit’ vote. However, more steady growth is anticipated from 2018 onwards, driven by the replacement sector and the increasing concern regarding energy efficiency and energy costs etc. By 2020, it is estimated that the UK domestic central heating market will have increased by 14% in value terms, compared to 2016.

The ‘Domestic Central Heating Market Report – Focus on Smart Heating Controls - UK 2016-2020 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.

Irish construction sector set for highest rate of output growth in a decade

The Irish construction and housebuilding sector has now turned a corner after several years of decline, with renewed focus on recovery after a lengthy and deep recession. In 2016, the recovery in the Irish construction sector is set to accelerate and experience the highest rate of output growth in over a decade at around 20% to reach around €15.1bn. However, industry output levels are still only a fraction of those seen during the peak of 2007 when output reached over €38bn.

Current estimates suggest that total output in the Irish construction industry will continue to see growth throughout the period 2017-2020, albeit at a lower rate than experienced during 2014-16. In terms of regional construction output, the East and Midlands region (also known as Leinster) continues to have the largest share of the construction market, with over 8,000 projects at various stages of development.

The private non-residential sector, which includes all industrial, commercial, retail, agricultural, and hotel & leisure construction output, is now experiencing a strong recovery in development activity, and this is expected to continue in 2016, with activity levels increasing and output forecast to grow by over 23%. The Irish market is also benefiting from large scale FDI within the bio-pharma and data centre sectors and there are several large-scale bio-pharmaceutical, clean technology and data centre developments currently taking place across Ireland.

In 2015, the value of construction related investment associated with new social infrastructure construction projects also rose strongly, and increased public capital programme allocations for the period 2016 to 2021 will support an increase in overall output.

Both education and healthcare construction output is expected to benefit from investment under the Capital Plan 2016-2021, with a new €3.8bn School Building Programme to take place over the same period. The residential sector has been slow to recover from the economic and property downturn and, although annual housing completions are beginning to rise, there is now a very significant demand for housing in the major urban areas which is causing significant increases in rental costs, something which should stimulate housebuilding activity.

The Irish contracting industry is highly fragmented with a large number of small to medium sized companies, many of whom specialise in repair and maintenance activities and operate on a regional basis. Unlike the UK market, which is dominated by a dozen or so large, quoted companies with separate commercial, civil engineering and housebuilding operations, the Irish market is characterised by many smaller companies who operate across both residential and commercial sectors.

“The supply structure for the Irish housebuilding market is also highly fragmented with no more than one player having more than 2% of the market” said Keith Taylor, Director of AMA Research. “Over the past 10 years, the structure of the industry has changed fundamentally, with the collapse of several of Ireland’s largest housebuilders and developers, and there are now just two publicly quoted housebuilders in Ireland.”

Overall output values are expected to increase by around 10% in 2017 and by 9-10% thereafter to until 2020. Into the medium-term, the return to growth is expected to be driven by the private commercial and residential sectors - supported by growing investment in social housing - and civil engineering activity. Output will also be supported by improving consumer and investor confidence as regional and global economic conditions improve.

Both the Irish construction and engineering industries have strong exposure to the UK market. Though the UK’s decision to leave the EU has caused uncertainty to the economic outlook, the full impact of ‘Brexit’ on the Irish economy and construction and housebuilding industries will take time to emerge. However, there may be a more positive impact on the Irish construction industry with opportunities for UK-based corporates and financial sector firms to relocate from the UK to elsewhere within the European single market.

The ‘Construction and Housebuilding Market Report – Republic of Ireland - 2016-2020 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.

Panelised Modular Building Systems - UK 2016-2020 - Key Facts

• The market for panelised modular building systems was estimated to have grown by 14% since 2011.
• Timber frame is by far the largest product sector within the definition of this report accounting for almost 70% of the sector.
• The largest five manufacturers account for an estimated 35-40% of timber frame sector sales.
• There now appear to be fewer than 10 manufacturers of precast panel systems.
• The key end use sector for panelised systems is private housing and this sector is estimated to account for 30-35% of the demand.

These facts have been extracted from AMA Research's report 'Panelised Modular Building Systems Market Report - UK 2016-2020 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724

Heating Spares - UK 2016-2020 - Key Facts

• The estimated total value of UK market for heating spares has grown by 20% in the last 4 years.
• The market is expected to grow by a further 17% over the next 5 years.
• Boiler manufacturers themselves account for around 15% of the distribution supply chain for these products.
• The range of products in the heating spares sector is vast with some merchants stocking around 30,000 products or more.
• The principle source of imports for the UK market is Germany, which accounted for 36% of imports.

These facts have been extracted from AMA Research's report 'Heating Spares Market Report - UK 2016-2020 Analysis', available from www.amaresearch.co.uk or by calling 01242 235724.

6% growth achieved in the UK electrical accessories market last year

UK’s electrical accessories market is estimated to have grown by 6% in 2015, driven primarily by improvements in construction output. The growth rate in 2016 is forecast at a more modest 3%. Although the improving economic situation has led to a rise in construction output across most end use sectors, price competition in lower cost products and increasing levels of low cost imports impacted negatively on market value in 2013 and 2014, with just 1% growth achieved in each of those years.

The market is dominated by low voltage cable systems with value share of around 60%, followed by circuit protection accounting for around a quarter of the market, and wiring accessories with a smaller share in value terms. As the electrical accessories market is mature, the product mix has remained fairly stable in recent years.

Key influencing factors on the market include legislation on energy efficiency and carbon emissions, which has seen increased use of integrated systems spreading throughout domestic and commercial markets to provide greater control for heating, lighting and all electrical systems. Raw material prices also play an important role in the market performance for electrical accessories, with the price of cable in particular being highly dependent on copper prices. In addition, exchange rates can influence the market value substantially as many products are imported.

Supply within the electrical accessories market is dominated by a number of large multi-national organisations, which generally offer a wide range of products of which electrical accessories form a small part. The market also contains a number of smaller, electrical accessory focused companies specialising in a specific area of the market. Recent activity at supplier level has involved consolidation, rationalisation and cost reduction, along with research and development to exploit opportunities for value added products.

The distribution structure of the electrical accessories market is complex with a wide range of possible routes to market. However, electrical wholesalers are central to the distribution network and account for a large proportion of market distribution.

The electrical accessories market is a mature and sizeable one, therefore forecasts are for relatively slow and steady growth of 1-3% per annum until 2020, in line with relatively subdued forecasts for construction as a whole, following the UK's decision to leave the EU. The current focus on integrated solutions and systems within the electrical accessories market will continue to feed demand in the medium term, as well as an increased use of pre-fabricated and modular wiring assemblies that make installations easier and quicker. Energy efficiency regulations will also continue to influence the development of the market.

“In addition to the current uncertain state of the economy, pressure on pricing is likely to remain a feature of this market for some time” said Keith Taylor, Director of AMA Research. “However, the weakness of Sterling has recently driven up the price of imported products and this has boosted the export market and may lead to higher demand for UK-manufactured products. Raw material costs will therefore continue to be a major influence on market value.”

The ‘Electrical Accessories Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience 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.

Plumbers merchants market forecast to increase by 4% in 2016

The plumbers merchant market was worth an estimated £4bn in 2015, having recovered strongly in recent years. The market value declined during 2011/12, reaching a low point in 2012. From 2013 onwards, demand has increased leading to greater demand for plumbing materials, bathroom and shower products, and the plumbers’ merchants market is forecast to grow by around 4% in 2016.

Increasing demand has been due to the improving economic climate in general since 2013, with demand increasing for both new work and RMI activity. Output growth, which has been particularly strong during the past 2 years, was also experienced across most construction sub-sectors, including the housing and commercial sectors, such as offices, retail and entertainment and leisure.

However, price competition remains fierce and this may influence margins going forward. In order to differentiate themselves, some plumbers merchants have invested in improving the overall customer experience through enhanced service, such as extended opening times, greater availability of stock and heightened promotional activity. Many have also expanded their online presence, to ensure that they compete with rising internet sales. The growth of multi-channel merchanting, which combines physical premises with an online store, is forecast to continue.

Consolidation has been a feature of the marketplace in recent years, as nationals have acquired smaller regional operations in order to extend their reach and range of services. However, many regional and independent merchants have performed well, with some expanding their number of branches to improve their product offering and stock levels to meet local needs. This has been coupled with a focus on facilities which appeal to the public, not just the trade, such as bathroom and kitchen showrooms.

At present, the price of imported goods is increasing due to exchange rate fluctuations – something which will contribute to an uplift in market value in the short term. The issue is likely to affect a significant number of product sectors in the longer term.

It is extremely difficult to forecast the impact of the outcome of the EU Referendum on the economy going forward. Several economic forecasts suggest that the UK economy will start to slow, with business and consumer confidence affected, potentially with lower GDP growth in 2017 and 2018. The situation may improve after this, depending on the outcome of trade negotiations, both within and outside the EU, which have yet to take place.

“While there are indications of a slowdown in growth in the housing and commercial sectors from mid to late-2016, the plumbers’ merchants market is still forecast to increase by around 4% compared with 2015, with a further 2-3% per annum expected from 2017 onwards” said Keith Taylor, Director of AMA Research. “However, the market value remains below levels seen in 2007.”

Going forward, the market value is likely to increase in the short term, boosted by price increases, however, the outlook is more uncertain for the longer term. A strong demand for housing and an undersupply of homes is likely to continue to be a key driver supporting the plumbers merchant market in the medium to long term.

The ‘Plumbers Merchants Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience 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.

Double digit growth anticipated in the UK pharmaceutical construction sector in 2016

The level of construction output in the pharmaceutical sector has grown strongly in recent years, with a focus of developments on high-value laboratories and cleanrooms. The market  is currently buoyant and showing double digit growth, with a further 13% growth anticipated for 2016. The UK is one of the largest pharmaceutical markets in the world, and the sector makes a greater contribution to the UK economy than any other industrial sector.

Though there has been some scaling-back of R&D budgets in the UK in recent years - due to issues such as slowing R&D pipelines, dwindling R&D and healthcare budgets, rising costs, impending ‘patent cliffs’, increased regulatory controls and increased pricing pressures - pharmaceutical manufacturing investment activity in the UK has been slowly increasing over the last couple of years. It appears confidence is strong in the market and this looks set to continue into 2016-17, despite the ongoing threat of global economic uncertainty and the more recent threat of the UK’s exit from the EU.

Although the volume of work has increased, tender opportunities are becoming increasingly competitive resulting in tighter margins and, despite renewed activity, many UK pharmaceutical producers are not significantly increasing levels of capital expenditure. However, the Government has announced a forward pipeline of over £1.9bn worth of capital projects in the pharmaceutical and biotechnology sectors between now and 2020. In addition to these confirmed capital projects, significant expansion plans have been announced by some of the leading pharmaceutical companies, which should be of interest to construction companies and their supply chains operating in the pharmaceutical sector. A major trend in 2016 has also been a continued capital investment in science parks and university innovation campuses, with a focus on R&D, and enterprise zones.

In terms of construction costs, pharmaceutical R&D and manufacturing facilities are among the most energy intensive and expensive of buildings and are also highly regulated in terms of design and function. Current design and construction trends are moving away from ‘bespoke’ buildings to flexible and mobile laboratories and cleanrooms requiring less time to design and build and incorporating modern methods of construction. The demand for mobile or modular cleanrooms is increasing, driven by industry cutbacks which have forced many pharmaceutical companies to rethink their business and manufacturing operations.

Increasing specialisation within the pharmaceutical industry has brought about varied opportunities for construction engineers and contractors to design and develop R&D facilities, pharmaceutical production processes, and assembly of drug delivery devices/systems, construction and maintenance of highly specialised production facilities, associated service/support facilities and continuous improvement of process operations.

The industry is expected to continue to show modest growth over the next few years, reflecting the positive factors and trends in the growing UK pharmaceutical industry, but also the economic uncertainty created by the UK’s vote to leave the EU, which will constrain growth somewhat. Forecasts are for annual growth of between 4-6% from 2018 onwards.

Keith Taylor, Director of AMA Research said: “So far, the larger pharmaceuticals firms appear to have been largely unscathed by the UK vote to leave the EU – with a significant proportion of the sales of the major pharmaceutical companies generated overseas and a weaker pound likely to result in a significant rise in profits. However, Brexit has the potential to create significant issues for the UK life sciences industry as it may affect the regulation of medicines, EU clinical trials regulations, EU funding for research and access to R&D facilities, access to the single market and R&D workforce, and intellectual property.”

The ‘Pharmaceutical & Biotechnology Construction Sector Report – UK 2016-2020 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.

Forecasts indicate steady medium-term growth for the household textiles market

The UK market for household textiles is estimated to have grown by 3% in 2015, with similar growth forecast for 2016, according to a new report by AMA Research. Consumer confidence remained high in 2015, although market values have been negatively affected by high levels of competition and a proliferation of lower cost imports in this sector. The situation in late-2016 is uncertain, though underlying demand will come from replacement purchases, which in the household textiles market are significant.

Given the maturity of the household textiles market in the UK, sales are heavily reliant on replacement purchases. Daily wear and tear of sheets, towels, pillowcases and similar items, drives the need to replace them on a regular basis and helps underpin demand. Most items are relatively low value and therefore the market is not subject to the same degree of volatility experienced by higher value household products.

Bed linen dominates the household textiles product mix in 2016 with a share of around 40%, followed by filled products, bathroom textiles and then table linen/kitchen towelling, which accounts for a smaller share. Factors influencing the bed linen sector in recent years have included competitive pricing and year-round discounting, which have been compounded by increasing fragmentation and a growing online market. Lower prices have also shortened replacement cycles, encouraging householders to replace worn or damaged linens more often, but lower prices are also stimulating a switch to higher quality bedlinen as consumer tastes become increasingly influenced by exposure to higher quality bedding in hotels, for example.

Market growth in the filled products sector has been stimulated by higher demand levels from the hospitals and care homes sector as well as the hospitality sector. Sales of duvets have remained fairly strong, underpinned by continuing developments in filling materials, whilst steady demand from the contract sector has continued to drive sales of pillows. In addition, another important factor stimulating volume growth has been the extension of ranges within grocery multiples and also discount retailers, with the latter in particular offering filled products at competitive prices.

Bathroom Textiles is a substantial sector, now worth around £300m – sales growth has been steady and largely influenced by the same factors impacting on the wider market.

“Future prospects for the household textiles market are relatively positive, although given the potential for a significant shift in economic conditions; it is currently difficult to make any confident forecasts” said Andrew Hartley, Director of AMA Research. “Current forecasts are for steady but moderate growth of around 2-3% in 2016, and 1-2% per annum in the medium term, reflecting not only the maturity of the market and the potentially challenging economic conditions, but also a continuing polarisation of the market.”

The post-Brexit market points to a number of potential concerns, not the least of which is a fall in consumer confidence and spending. Business confidence may also be affected, although the hospitality sector – a major user of household textile products and an important indicator of the health of the market – is expected to benefit from a weaker pound. On a more positive note, household textiles are relatively low-cost items and largely essential rather than luxury items, with some products, such as towels and bedlinen in particular, subject to high levels of wear and tear. While replacement cycles can be extended, the availability of a greater choice of affordable products on the market means that householders have the option of cheaper replacements, should economic circumstances dictate, but AMA are reasonably positive about the market in the next few years.

The ‘Household Textiles Market Report – UK 2016-2020 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services with over 25 years’ experience 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.