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The overall ventilation, air conditioning and
non-domestic heating market is estimated to be worth some £1.25 billion
in 2003.
Whilst the HVAC market benefited from the completion of
Millennium projects in 1999-2001, many products experienced adverse
conditions in 2001 arising from 9/11, and the impact of climatic
factors, although heaters benefited from strong temporary demand due to
flooding and the associated ‘drying-out’ operations later in the year.
After several years of positive growth from 1995 to 2001, the chart
indicates underlying low level growth from around 2001 to 2003 with a
more pronounced uplift forecast from 2004 to 2008.
Whilst the steady performance of the UK economy has
tended to impart a degree of stability to many market sectors, 2001
showed a significant slowdown in GDP although construction output grew
steadily, expanding by 8% in 2002, the highest increase since 1998.
Higher government spending sustained construction growth
in the face of weakening infrastructure and private sector building
output in 2003, with a strong performance from housing RMI and PFI
funded projects in health and education. However, the manufacturing
sector remained weak with mixed trends across the various sectors. Some
softening of demand in the telecom, industrial maintenance and
commercial construction sectors was also evident.
In late 2004 the UK economy was regarded as robust with
strong growth in certain sectors of construction, positive growth in the
housing market and some signs of recovery in the manufacturing sector.
The overall HVAC market remains modestly positive, with certain sectors
tending to perform better than others.
Whilst our estimates of the mix of the various elements
of climate control equipment it should be borne in mind that the
practical applications of HVAC are seldom so neatly categorised,
particularly in refurbishment and upgrades, where climate control
systems have evolved over a number of years and often contain elements
of all the major HVAC product sectors, for example fans, heaters, air
handling units, air conditioning and accessories. As a result, turnkey
packages, including design, installation, maintenance and remote
monitoring are a growing feature of the HVAC sector and are forecast to
expand even further reflecting trends to integrated building management
systems and higher levels of control.
Historically the mix of products is relatively unchanged
since our last report although the chart disguises the fact that the
value of certain sub-sectors is growing while others are declining,
against the backdrop of relatively flat market conditions in 2003. The
overall market outlook is relatively positive although certain market
sub-sectors will tend to perform better than others. It is forecast
that the short term development of the market will be motivated by major
increases in Government funding in health, education and infrastructure,
whilst medium to long term projections are likely to reflect higher
levels of new housebuilding and the continuing influence of thermal
efficiency legislation.
Other influences which have a peripheral but relatively
minor impact on the market, include the application of solar power, also
combined heat and power, heat recovery and energy efficiency. The
growth of mobile temporary or long term heating boiler hire, and
temporary HVAC hire, represent additional trends, which are unlikely to
benefit the HVAC manufacturers’ market in the long term.
It should be emphasised that the level of demand for HVAC
products varies regionally throughout the UK, reflecting regional
development agency, government, and EU investment strategies, local
industry specialisation and housebuilding programmes, also geographical,
seasonal and climatic features. In addition, lengthy bureaucratic
planning and contract approval processes can cause considerable delays
in the scheduling of projects which can impact adversely on turnover
figures and cash flow projections.
The Ventilation market consists of two core product
types, principally axial and centrifugal fans. During 2003, the value
of the overall ventilation sector was similar to 2002, reflecting
relatively stable market conditions. Axial fans account for the largest
share of this product sector and are used in heating and air
conditioning applications, so market projections must be interpreted
with a certain amount of latitude. As indicated, the sector is
currently experiencing flat market conditions, although more positive
growth is forecast, deriving from improvements in certain sectors of
construction, government health and education investment, and integrated
BMS ventilating and heating solutions.
The integration of fans and warm air heaters may provide
effective air movement and temperature solutions, dependent upon the
application, without the need to install air conditioning, for
example it is reported that slow speed high volume fans have the ability
to reduce summer temperatures and produce a breeze in high ceiling
buildings. In addition, many non domestic buildings ‘evolve’ as time
goes on, and may incorporate ventilating, heating and air conditioning
equipment added at different points in the buildings’ history.
Therefore does not necessarily follow that air
conditioning systems will automatically replace ventilation and heating
systems on a ‘like-for-like’ basis. As indicated above, applications
tend to vary, and each bespoke package will tend to be custom designed
to provide the required levels of air movement, heating, and cooling.
The ability of BMS integrated ventilating and heating
systems to provide higher levels of comfort and energy efficiency,
represents a significant competitive advantage and may tend to mitigate
some share erosion by the air conditioning sector. In addition, greater
levels of environmental concern may lead to ventilation solutions rather
than air conditioning solutions in some applications, as the latter can
be perceived to be relatively energy-inefficient.
Reducing draughts, natural air supply and thermal loss
resulting from high levels of thermal insulation has propagated the
tendency for higher levels of condensation and mould growth; in
addition, according to a recent commissioned report by DEFRA, highly
insulated buildings meeting the required regulatory standards may tend
to result in unpleasantly hot conditions for the occupant during the
summer, which is likely to require remedial air movement and temperature
solutions. In effect, the above regulatory influences have provided
additional motivation for the ventilation and air conditioning sectors.
There are a number of ventilation suppliers specialising
in specific product application areas. In terms of suppliers which have
broader target markets, product range and turnover, Flakt Woods Ltd,
Greenwood Air Management, Applied Energy, Matthews & Yates
and Nuaire are included. Other competitors include the
Tomkins Group (ADL and Actionair), BAXI Clean Air Systems, Airflow
Developments, Johnson & Starley, Silavent, Manrose, The Stadium Group,
Elta Fans, Trox, Vortice, Dunham Bush, Bush Nelson,
and Howden Industrial.
Distribution channels for ventilation products include
Heating and Ventilating Distributors, Electrical Wholesalers, Builders
Merchants and DIY Multiples. Direct sales to end users and OEM
applications also represent significant distribution channels.
The air-conditioning market is estimated to contribute
around 41% of the total value of the HVAC market with a 2003 market
value of around £520 million. Packaged air conditioning (PAC) products
contributed an estimated 60% in value terms. Underlying trends
supporting growth in the air conditioning market include greater
expectations of comfort in the workplace and home, improved air quality,
the increase in popularity of PAC units, including hire and mobile air
conditioning units, which are a central feature of market expansion. In
addition, niche markets such as ‘clean’ rooms, hospitals, surgeries,
provide further niche sector application opportunities.
The growth of the PAC sector in 2003 was accelerated by
the hot and lengthy summer with significant rises in demand from the
residential and small private commercial sectors. However, the central
station sector continued to experience depressed conditions in
manufacturing and new build applications. Highly competitive imports
and keen pricing strategies represented further limiting factors
constraining growth in the overall market.
Whilst future forecasts for the air conditioning market
are dependent upon levels of Government investment in health, education
and the infrastructure, substantial opportunities exist in the private
sector, for example ‘overdue’ hotels refurbishment, and the ‘opening-up’
of the betting and gaming sector following deregulation in 2004, tending
to stimulate gambling casinos and bingo halls, whilst retail expansion
mirrors the expansion in urban regeneration schemes. Government and
private investment levels are likely to act as a positive influence,
although certain sectors are likely to perform better than others. The
key issue underlying the potential expansion of air conditioning in the
UK is the extent to which future energy efficiency policies will
tolerate the levels of electricity consumption likely to be incurred.
The air conditioning market is led by the Toshiba
Carrier Corporation, Daikin, Mitsubishi, Hitachi
and Fujitsu. Other significant air conditioning suppliers
include Marstair (successors to IMI Air Conditioning),
Airedale, Denco, Edenaire, Weatherite, AAF,
Trane, York International, Trox, Dunham Bush, etc.
Distribution of air conditioning systems varies
significantly between PAC Systems and Central Systems. Packaged units
are sold mainly via distributors, although contractors also account for
some sales. Central systems are primarily distributed direct to
contractors, reflecting requirements for a high level of technical
expertise to facilitate the assembly and installation of air
conditioning systems into different types of buildings.
Non-Domestic
Heating
The non-domestic heating sector currently contributes
approximately 16% of the total value of the HVAC market and consists of
Radiators, Commercial Boilers, Heat Emitters and Direct Heating
appliances, with the product mix led by boilers, direct heating
products, commercial radiators and other heat emitters.
Growth in the market has been hampered by a number of
factors, including reducing heat input requirement due to higher levels
of insulation, the utilisation of fabric energy storage and solar gain,
the heat generated in offices by computer and electronic devices, trends
to heat recovery, and some impact from air conditioning.
Future prospects for all heating sectors will be
influenced by the relative prices of gas, oil, coal and electricity at
the time of installation of new build or refurbishment and by the
relative efficiencies of the various methods of heat transmission and
whether process heat recovery opportunities are available. Heat
recovery utilising CHP represent a peripheral influence in instances
where electrical and heating loads may be ‘matched’. Under the present
regime of generally increasing fuel and electricity prices it is likely
that opportunities for CHP projects will be viewed with increasing
interest and may provide some incremental sector growth.
Future prospects will also tend to be influenced by the
growth of heating boiler hire for long term solutions in addition to
coverage during planned shut downs and emergencies. Overall, future
growth is likely to be constrained by the factors mentioned above with
the market forecast to demonstrate stability or a decline in real terms
in the short, medium and long term.
Key suppliers of commercial boilers include Ideal
Boilers, Hamworthy Heating, Potterton Commercial, BIB Cochran, and
Wellman Robey. Major manufacturers of radiators are Caradon
Stelrad, Myson/Rettig and Barlo (Rettig). There has
been growth of specialist products such as LST (Low Surface Temperature)
for care homes, hospitals, schools with key suppliers including
Rettig, PMP-Walney, Hudevad and Zehnder. Suppliers of heat
emitters include Johnson and Starley, Reznor, Biddle Air Systems,
Dunham Bush and Lennox, warm air suppliers include
Powrmatic, Roberts Gordon, Youngman, Ambi-Rad and
Babcock Wanson. Key competitors in radiant heating include
Ambi-Rad, Roberts Gordon, Schwank and Gas Fired
Products, Bush Nelson.
Heat emitters are distributed through various channels,
with distributors and contractors taking the largest share. Direct and
indirect heaters tend to be sold direct to contractors and distributors,
although hire channels represent a significant outlet for certain
heating products.
Heating &
Ventilating Accessories
Non-domestic heating and ventilation accessories are
estimated to account for around 27% of the overall market, with
ventilation and air conditioning accessories accounting for the
majority. The sector has performed positively, fuelled by products such
as speed controllers, ducting, filters and diffusers. Natural
ventilation products have also performed satisfactorily with ‘passive
stack ventilation’ in Local Authority and RSL sectors doing well. The
general tightening of insulation requirements under ‘Part L’ of the
building regulations may lead to a requirement for higher levels of air
movement, which may motivate the accessories sector.
The
accessories sector in general is being stimulated by legislation with
product development particularly active in the fire and smoke alarm
sectors, also natural ventilation and passive stack. Trends to longer
duct runs are also likely to enhance market value in the future.
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