Mechanical and Electrical Contractors Market Report – UK 2021-2025
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The 6th edition of the ‘M&E Contractors Market Report UK 2021-2025’ represents an informed and up-to-date review of the UK market for mechanical and electrical (M&E) contracting, focusing on multi-service M&E contracting companies executing work within the non-residential construction sector.
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The 6th edition of the ‘Mechanical and Electronical Contractors Market Report UK 2021-2025’ represents an informed and up-to-date review of the UK market for mechanical and electrical (M&E) contracting, focusing on multi-service M&E contracting companies executing work within the non-residential construction sector.
Key Issues Covered in the Report
- The effects of the Covid-19 pandemic on the M&E contracting industry. Impact on the market going forward.
- Developments within the construction industry and how recovery from the pandemic will vary between sectors of the industry.
- The influence of government spending and the continuing importance of service payments for PFI contracts.
- Pressure on profit margins and measures taken by companies to improve profitability.
- The 2050 carbon net zero target and the impact of legislation and technological developments regarding energy efficiency and carbon reduction.
Some of the companies included:
Integrated Utility Services, WPD Contracting Services, Veolia Energy & Utility Services, Engie FM (formerly Cofely), UK Power Networks Services, SSE Contracting, PH Jones, Imtech, Derry Building Services, Balfour Beatty Kilpatrick, Crown House Technologies, Bouygues Energies & Services, SES (Engineering Services), Kier Facilities Services, VolkerFitzpatrick, BAM Services Engineering, Skanska Rashleigh Weatherfoil, Vinci Facilities, MITIE Technical Facilities Management, Integral UK, CBRE Managed Services
Areas of Particular Interest
- Covid-19 has focused attention on safe building design, including good ventilation to prevent the spread of infection.
- With the government drive to boost post-pandemic recovery, government spending in infrastructure, health and education will be key for future growth.
- The rise of e-commerce has made data centres and the warehousing/logistics sector outstanding potential sources of growth for M&E contractors.
- Adoption of new technologies and products related to energy efficiency and carbon reduction,
- M&E contractors refocusing their businesses, and sometimes restructuring organisation, to concentrate on improving profitability.
KEY AREAS COVERED IN THE REPORT
Market Overview
- Overall market size by value 2016 to 2020, rates of change, key trends, forecasts through to 2025.
- Overall mix of work by by project type (new build, RMI, refurbishment) and service type (electrical, plumbing & HVAC, other)
- Factors influencing the market, including non-residential construction output, government spending, legislation & standards, outsourcing, carbon reduction, and product development.
- Analysis by UK region of M&E market value, construction output and number of M&E enterprises.
Market Definition
- The definition of the market for M&E Contracting includes MEP (Mechanical, Electrical, Public Health/Plumbing) work undertaken by companies commonly referred to as:
- M&E Engineers/Contractors.
- MEP Service Providers.
- Technical Services/Hard FM Providers.
- Building Services Engineers/Contractors.
- The report focuses on those contractors providing both mechanical and electrical services and covers new installations, major refurbishment and RMI work in non-domestic applications only.
End-Use Sectors
- Overview of the non-residential construction market – new work output and RMI output, from 2016 to 2020, forecasts to 2025.
- Analysis of construction output trends, including impact of Covid-19, by individual end-use sectors – education, health, entertainment & leisure, offices, infrastructure, retail, industrial.
- Building and product design trends affecting M&E contractors by end-use sector.
Contractor Review
- Structure of M&E contracting market: analysis of M&E enterprises by turnover, type of work, region
- Trends in M&E business performance, structure, acquisitions and divestments.
- Analysis of M&E contractors’ profit margins 2016 to 2020.
- Market shares of M&E contractors, summary of financial information and profiles of around 40 leading contractors.
The M&E contracting market declined sharply in 2020 due to the disruption to construction activity caused by the Covid-19 pandemic. This followed a period of robust growth between 2013 and 2017 although the market had flattened in 2018-2019.
The decline was mitigated by a strong return to activity in the latter part of 2020 as contractors adapted working practices to comply with social distancing requirements. The market is continuing to recover into 2021 but the speed of recovery is being hindered by supply shortages, caused by disruption at all levels of the supply chain, which is leading to price rises for a wide range of products and materials.
Profitability among M&E contractors remains fairly low but has been improving over the last two years, particularly for larger contractors, as companies have refocused their business on profitable sectors and avoided low bidding.
Covid-19 is affecting hygiene and safety requirements in building design, leading to increased demand for upgrading and installation of ventilation systems, particularly in schools and hospitals, as well as modifications to ensure a safer working environment in offices, washrooms and catering facilities.
The move towards zero carbon is another key driver of market growth, leading to increased demand for products such as LED lighting, electric vehicle charging infrastructure, building monitoring and control systems and renewable energy products such as heat pumps.
The immediate prospects for the UK M&E contracting market are positive, as the economy recovers rapidly from the pandemic, with 4– 6% annual growth expected in 2021 and 2022, before returning to more modest growth rates of 2-3% per annum from 2023 5o 2025. However, the pace of recovery is likely to vary considerably across the various sub-sectors of non-residential construction,
Contents Listing
1. INTRODUCTION 7
1.1 INTRODUCTION 7
1.2 SOURCES OF INFORMATION 7
2. EXECUTIVE SUMMARY & MARKET PROSPECTS 9
2.1 SUMMARY 9
2.2 MARKET PROSPECTS 10
3. ECONOMIC ENVIRONMENT 11
3.1 OVERVIEW AND OUTLOOK 11
3.2 KEY DATA 12
3.2.1 GDP 12
3.2.2 Inflation & Interest Rates 12
3.2.3 Employment & Wages 13
3.2.4 Household Consumption 14
3.2.5 Sterling 15
4. MECHANICAL & ELECTRICAL CONTRACTING MARKET 16
4.1 MARKET DEFINITION 16
4.2 MARKET SIZE & TRENDS 17
4.3 MARKET MIX 19
4.3.1 Mix by Project Type (New Build, RMI, Refurbishment) 19
4.3.2 Mix by Service Type (Electrical, PHVAC, Other) 20
4.4 KEY MARKET INFLUENCES 21
4.4.1 Construction Output 21
4.4.2 Government Spending & PPP/PFI 23
4.4.3 Legislation and Standards 26
4.4.4 Outsourcing of Hard FM and M&E Services 29
4.4.5 Carbon Reduction and Green Energy Requirements 32
4.4.6 Product Development 33
5. REGIONAL ANALYSIS 37
5.1 OVERVIEW 37
5.2 THE NORTH OF ENGLAND 38
5.3 THE MIDLANDS 40
5.4 EAST OF ENGLAND 41
5.5 LONDON & THE SOUTH EAST 42
5.6 THE SOUTH WEST 43
5.7 WALES 44
5.8 SCOTLAND 45
5.9 NORTHERN IRELAND 46
6. KEY END USE SECTORS 47
6.1 OVERVIEW 47
6.2 EDUCATION 48
6.3 OFFICES 49
6.4 INFRASTRUCTURE 50
6.5 ENTERTAINMENT & LEISURE 52
6.6 HEALTHCARE 53
6.7 RETAIL 55
6.8 INDUSTRIAL 56
6.9 OTHER SECTORS 57
7. CONTRACTOR REVIEW 59
7.1 MARKET STRUCTURE 59
7.1.1 Types of M&E Contractors 59
7.1.2 Types of Work Undertaken 61
7.1.3 Geographical Coverage 62
7.2 KEY TRENDS 63
7.3 PROFITABILITY 65
7.4 LEADING M&E CONTRACTING COMPANIES 66
7.5 M&E CONTRACTOR PROFILES 69
7.5.1 Large M&E Contractors (£100m+ M&E Turnover) 69
7.5.2 Medium Sized M&E Contractors (£20m+ M&E Turnover) 76
7.6 PROCUREMENT 80
Tables & Charts
CHART 1: UK MARKET FOR MECHANICAL & ELECTRICAL CONTRACTING 2014 TO 2023 – BY VALUE (£BN) 9
CHART 2: GDP DATA – 2015-2020 – KEY CONSTITUENT ELEMENTS 12
CHART 3: CPI INFLATION AND BANK OF ENGLAND BASE RATE 2008-2023 13
CHART 4: AVERAGE WEEKLY EARNINGS DATA – GB – TOTAL PAY – 2014-2020 (SEASONALLY ADJUSTED) 14
CHART 5: PDI & SAVINGS RATIO AT CURRENT PRICES 2008-2023 14
CHART 6: EXCHANGE RATE FLUCTUATIONS 2015-2021 – STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 15
TABLE 7: OVERVIEW OF MEP SERVICES 16TABLE 8: UK M&E CONTRACTING MARKET 2014 TO 2023 – BY VALUE (£M) 17
CHART 9: MIX BY TYPE OF PROJECT (NEW BUILD, RMI, REFURBISHMENT) – % BY VALUE 2018 19
CHART 10: MIX BY SERVICE TYPE (ELECTRICAL, PHVAC, OTHER) % BY VALUE 2018 20
CHART 11: CONSTRUCTION OUTPUT (GREAT BRITAIN) NEW WORK & RMI -CURRENT PRICES (£BN) 2014-2023 21
CHART 12: CONSTRUCTION NEW WORK BY END-USE SECTOR BY VALUE 2018 – MARKET £114BN. 22
TABLE 13: PUBLIC SECTOR CAPITAL BUDGET -DEPARTMENTAL EXPENDITURE LIMITS & ANNUALLY MANAGED EXPENDITURE (£BN) 23
TABLE 14: CURRENT PFI PROJECTS ACROSS GOVERNMENT BY DEPARTMENT 2017 24
CHART 15: NUMBER AND COMBINED CAPITAL VALUE OF PFI PROJECTS SIGNED ANNUALLY 2007 TO 2017 25
TABLE 16: PROJECTED SERVICE PAYMENTS UNDER PFI CONTRACTS – 2014/2015 TO 2029/2030 26
CHART 17: UK BUNDLED FM OUTSOURCING MARKET AT CURRENT PRICES 2014-2022 (£BN) 30
CHART 18: UK M&E CONTRACTING REGIONAL SHARES BY VALUE – 2018 37
CHART 19: CONSTRUCTION OUTPUT – REGIONAL SHARES BY VALUE – 2018 38
CHART 20: CONSTRUCTION OUTPUT 2014 – 2018 – NORTH OF ENGLAND – BY CONSTRUCTION TYPE (£M) 38
TABLE 21: NORTH OF ENGLAND – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 39
CHART 22: CONSTRUCTION OUTPUT 2014 – 2018 IN THE MIDLANDS – BY CONSTRUCTION TYPE (£M) 40
TABLE 23: THE MIDLANDS – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 40
CHART 24: CONSTRUCTION OUTPUT 2014 – 2018 IN THE EAST OF ENGLAND – BY CONSTRUCTION TYPE (£M) 41
TABLE 25: EAST OF ENGLAND – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 41
CHART 26: CONSTRUCTION OUTPUT 2014 – 2018 IN LONDON & THE SOUTH EAST – BY CONSTRUCTION TYPE (£M) 42
TABLE 27: LONDON AND SOUTH EAST ENGLAND – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 43
CHART 28: CONSTRUCTION OUTPUT 2014 – 2018 IN THE SOUTH WEST OF ENGLAND – BY CONSTRUCTION TYPE (£M) 43
TABLE 29: SOUTH WEST ENGLAND – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 44
CHART 30: CONSTRUCTION OUTPUT 2014-2018 IN WALES BY CONSTRUCTION TYPE (£M) 44
TABLE 31: WALES – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 45
CHART 32: CONSTRUCTION OUTPUT 2014-2018 IN SCOTLAND – BY CONSTRUCTION TYPE (£M) 45
TABLE 33: SCOTLAND – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 46
TABLE 34: NORTHERN IRELAND – VOLUME OF M&E CONTRACTING ENTERPRISES 2014 & 2018 46
CHART 35: UK M&E MARKET SECTOR SHARES BY VALUE – 2018 47
TABLE 36: EDUCATION SECTOR NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE 2014 – 2018 (£M) 48
TABLE 37: OFFICES NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE 2014-2018 (£M) 49
TABLE 38: INFRASTRUCTURE NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE 2014-2018 (£M) 51
CHART 39: UK INFRASTRUCTURE CONSTRUCTION BY TYPE – 2018 (%) 51
TABLE 40: ENTERTAINMENT & LEISURE NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE 2014-2018 (£M) 52
TABLE 41: HEALTHCARE SECTOR NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE – 2014-2018 (£M) 54
TABLE 42: RETAIL NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE 2014-2018 (£M) 55TABLE 43: INDUSTRIAL NEW CONSTRUCTION OUTPUT (PUBLIC/PRIVATE) BY VALUE 2014-2018 (£M) 56
TABLE 44: ENTERPRISES INVOLVED IN M&E ACTIVITIES REGISTERED FOR VAT BY TURNOVER BAND (%) 2014-2018 59
TABLE 45: M&E CONTRACTORS WITH ORIGINS IN POWER/ENERGY 60
TABLE 46: M&E CONTRACTORS WITH ORIGINS IN CONSTRUCTION/CIVILS 60
TABLE 47: M&E CONTRACTORS WITH ORIGINS IN SUPPORT SERVICES/FM 61
TABLE 48: UK ENTERPRISES INVOLVED IN MEP ACTIVITIES REGISTERED FOR VAT BY EMPLOYMENT SIZE BAND – 2018 61
CHART 49: MIX OF VAT REGISTERED BUSINESSES WITH MORE THAN 20 EMPLOYEES BY PRIMARY ACTIVITY 2018 62
CHART 50: VAT REGISTERED BUSINESSES INVOLVED IN MEP SERVICE PROVISION BY REGION (%) – 2018 63
CHART 51: M&E CONTRACTORS’ PROFIT MARGINS 2014-2018 – AVERAGE AND BY M&E TURNOVER SIZE (%) 65
CHART 52: MARKET SHARES BY M&E CONTRACTING TURNOVER 2018 66
TABLE 53: TOP M&E CONTRACTORS IN THE UK MARKET TURNOVER 2018 68
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