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UK Fabricators
Market by Product Sector at Trade Prices 2008
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AMA estimate that the
window and door fabrication market was worth around £2.3 billion at
trade prices in 2008. The economic climate has deteriorated
substantially throughout the course of 2008 and our estimate
represents a decline in market value of 13%. The UK is experiencing
extraordinary times in early 2009 as the global credit crunch bites
hard - the banking sector has seen high profile companies in
difficulties and confidence in the financial sector is very low.
The UK economy is now regarded as in recession, with the key
question now of how severe and prolonged the recession will be.
Against this backdrop,
the window fabrication market is faced with other major
difficulties. There is serious over capacity resulting in an
intensely competitive market - prices and margins remain under
pressure as companies compete heavily for business. It is expected
that this over-capacity will reduce in the short-medium term as a
result of mergers/acquisitions and business failures.
The house buying market
has slumped since late 2007 - a key factor for window replacement,
as many windows are replaced within a short time of new owners
moving into a house. New housebuilding has also slumped. Whilst
relatively small compared with the replacement market, this is
still an important sector and was a source of some growth up to
2007 before falling by over 30% in 2008 with little prospect of
recovery in 2009/10.
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The decline in the overall
replacement market may be mitigated to some degree in the public sector
by work undertaken as part of the Decent Homes initiative, and relative
strength in the education and health sectors, but the private home
improvement market is unlikely to recover in the near future.
Despite the gloom in the
housing market, the commercial construction market has seen significant
growth - increasing in value terms by 37% in the period 2002-2007.
However, by late 2008, construction orders were beginning to fall which
will hit the demand for windows in the next 2 years.
The supply sector remains very
fragmented as it comprises vertically integrated retail glazing
companies, PVC-U trade fabricators and fabricator/installers, aluminium
systems fabricator/installers, bespoke glazing contractors, composite
door manufacturers, commercial glazed door manufacturers, roof light
manufacturers, steel window manufacturers and major joinery companies.
In broad terms, the market for
fabricating doors and windows in early 2009 is characterised by
uncertainty both in commercial and residential markets. Add to this,
increasing unemployment, reducing consumer spending and a severe
constriction in the availability of credit, and the general outlook for
this market remains gloomy, with forecasts of over 25% decline in the
2008-11 period.
However, the ‘commercial
glazing’ market accounts for around 45% of the sector and application
areas, such as education and health, should see continued work in the
short term, offering some growth opportunities for door and window
suppliers, with government commitment to spending in place as well as
recent decision to advance spending in these sectors.
The structure of the industry has always been volatile
with a high turnover of fabricators and installers. As margins have
become more depressed in this saturated market, and the pressure on
companies to survive a downturn in sales alongside rapidly rising costs
becomes more acute, it is expected that there will be further significant
rationalization in the supply chain in 2009/10.
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