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The UK
prefabricated semi-finished buildings
market has experienced a period of strong growth with the total
market in 2005 estimated at over £490 million
at manufacturers selling prices, which represents growth of around 10%
compared with the previous year.
The market has been segmented by type
of building material, and by type of end user. The term ‘semi-finished’
refers to flat pack and
off-site manufactured assemblies
which, after transportation and on-site installation form three
dimensional units and modules made of pre-cast concrete, steel, timber,
or structural insulated panels. In general terms, semi-finished
prefabricated construction permits a wider range of architectural design
opportunities than volumetric prefabricated construction. In addition,
irregular and non-standard building site configurations may, to some
limited extent, be accommodated in semi-finished structural layouts
whereas volumetric products may be regarded as less flexible in this
respect.
During the late-1990s and early 2000s,
the market experienced steady annual growth
reflecting varying levels of activity in construction sectors – for
example, the positive impact of millennium and Government health and
education funding, contrasting with the adverse effects of the global
recession/decline in IT and telecoms in 2001-2002. The years 2002-4
witnessed continuing growth driven by positive conditions in many
end-use sectors, coupled with growing market acceptance of modern
methods of construction..
More recently, during 2004/ 2005,
activity levels in commercial construction have remained relatively
stable, but in overall terms the construction market has been stimulated
by substantial increases in health, education, defence and
infrastructure funding, and also an increasing awareness of the need to
alleviate the housing shortage. The key issue of overall acceptability
levels of prefabrication by home owners remains to be resolved but there
has been significant market penetration in the timber frame sector, with
relatively steady expansion also in light gauge steel framing systems
for dwellings.
Timber frame now accounts for around
16 - 17% of housing in the UK, while steel frame and concrete options
indicate OSM (Offsite Manufacturing) in total now accounts for over 20%
of housing, which has primarily been driven by Government via the
affordable housing programme. In particular, the share taken by
apartments has now risen to around 45% - a doubling of share in just 5
years – where OSM is widely specified and accepted. Student
accommodation is another key growth area with over 20,000 bedrooms per
annum under construction.
Market penetration by the
semi-finished sector has also been facilitated by regulatory and
innovative influences, particularly in the light gauge steel framing
sector, where Corus, Metsec, Kingspan Offsite, etc.. are
developing steel module manufacture. .
The majority of prefabricated
semi-finished buildings comprise timber frame units, with a market share
of around 45% by value, whilst steel is estimated to account for a share
of around 25 %, concrete approximately 18% and structural insulated
panels around 10%, with other methods estimated at approximately 2%.
Forecasts indicate varying levels of
growth in these sectors and are dependent on end-user market growth and
the likelihood of share gain from traditional building methods, together
with the impact of the volumetric sector. Product innovations will also
have a major bearing on future prospects within different sectors, for
example the developments of structural insulated panels, insulated
concrete formwork, also pre-cast up to 16 storeys etc.
In terms of supply structure, the
prefabricated semi-finished building industry is changing rapidly as a
wide range of companies are attracted to the growth prospects of
prefabricated structures in the UK. Our estimates for 2005 indicate
that collectively Metsec, Caledonian Building Systems
(recently acquired by Champion Enterprises Inc) Kingspan
Off-Site, and Stewart Milne account for 25-35% of the market,
followed by Bell and Webster, CV Buchan, Tarmac Precast, Robertson
Timber Kit, Prestoplan and Walkers, with a collective share
of around 20-25%. It is estimated a combined share of 15-20% is
accounted for by Framing Solutions, Corus, Space4, Pace
Timber, Pinewood Structures, Ayrshire and
Taylor Lane.
Others includes the semi-finished activities of Wernick, McAvoy
Off-Site, and Terrapin, also many smaller operations with
involvement in the timber frame, SIP, concrete and light gauge steel
framing sectors, etc.
Our view is that the industry will be
extremely volatile over the next 5 years as more new entrants, either
from the UK or overseas, are attracted by the growth of prefabrication
in general. The industry is likely to experience changes in shares
reflecting joint ventures and acquisitions as companies seek to
establish them across different sectors or materials, or at varying
levels of prefabrication.
The level of imports and foreign
involvement in the semi-finished sector will tend to steadily increase
reflecting not only the attractiveness of commercial opportunities of UK
prefabricated construction but also the economical ‘flat pack’
long-distance transportability of semi-finished products in contrast
to volumetric prefabricated construction.
From 2006-2009, the overall market is
forecast to continue to grow at a rate of over 10% per annum to a broad
estimate of around £750m in 2009, reflecting growth in a range of end
use sectors, including cellular accommodation, hotels, apartments,
health, education, defence, etc. However, these forecasts are
indicative only and could prove either optimistic or pessimistic
depending on market acceptance of the relative benefits of volumetric or
semi-finished prefabrication in comparison to traditional construction
methods, and also the level of added value services provided within the
overall design package.
The housebuilding sector is likely to
provide underlying growth opportunities in the medium term, with
significant share gain by timber and steel frame manufacturers at the
expense of traditional brick and block. In the medium to long term,
light gauge steel framing and structural insulated panels are also
likely to capture increasing levels of share from traditional
construction, etc.
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