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Key Areas

Table of Contents

Executive Summary

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KEY AREAS

AMA Research have published the fifth edition of the ‘UK Domestic Replacement Door & Window Market Report 2001’ – incorporating original input and primary research, it represents an up-to-date and informed report on the Home Improvement market, with particular emphasis on the double-glazing sector.

Sectors covered in detail include:-

• WINDOWS
• RESIDENTIAL DOORS
• PATIO DOORS

While the UK economy has recovered strongly since 1997, the replacement door & window market has experienced a difficult climate, with continuing pressure on prices and margins throughout the supply chain. The report contains a detailed assessment of the market with interpretation of major developments and future trends by product.

Of particular interest:

• Market activity levels in 1999-2000
• Material usage trends in all product sectors.
• Review of distribution structure – changes in PVC-U systems supply.
• Market trends in the private and public sectors.

The report also includes an Appendix detailing the CURRENT VALUE and FUTURE PROGRAMME of Window Replacement for every Local Authority in England – projected expenditure of around £3 billion in the longer term. The listing indicates the major Authorities with window replacement programmes, outlining the scale and duration of activity. Key areas of coverage in the report include:

THE MARKET

• Historical background – development of market since the 1980s, economic influences, standards etc.
• Market size by Volume and Value – developments from 1986-2000 and forecasts of future trends within each product group up to 2004.
• Analysis of market in 1998-2000 – market performance and future potential in short/medium term – effects of price competition/margin implications.
• Analysis of developments in the private and public sectors. Growing role of Housing Associations - List of Top 30 Housing Associations by dwelling stock.
• Detailed listing for every Local Authority in England with housing stock outlining current and projected expenditure on window replacement – Volume of dwellings, current value of window replacement programme, estimated duration of programme etc.
• Market penetration levels – 1981-2000 and future growth, regional variations. Prospects for further penetration – growth of ‘second’ replacement market. Market saturation levels – variation between different products, growth in housing stock etc.

FRAME MATERIALS

• Analysis of market developments in use of Aluminum, PVC-U and Timber frames by each product – emphasis on double-glazing market.
• Rising use of PVC-U – will it continue in the new Millennium – or reaching saturation levels in some product sectors? Areas of strength for aluminium/timber. Regional variations.
• Trends in usage 1986-2000, forecasts of future developments – opportunity/threats (impact of new materials on entrance door market).
• Key influences on materials trends – cost differences, marketing and promotional strategies affecting material shares. Prospects for aluminium, timber and PVC-U?
• Importance of frame materials within market sectors – Local Authorities, Direct Sell, Housing Associations etc.

SUPPLY & DISTRIBUTION

• Detailed analysis of distribution structure for PVC-U, Aluminium and Timber – Extrusions/Systems, Kits, Bar length, fabricated products – different structure of timber market.
• Role of Extruders, Systems Companies, Fabricators, Merchants, Builders, Local Authorities, DIY Outlets etc – reasons for their market positions, market changes, acquisitions etc.
• Review of market/material trends in related sectors - conservatories, new build etc.
• Analysis of leading systems suppliers within each material group – market share analysis. Strengths and weaknesses – growing companies? Industry rationalization in the future.
• Retail outlets – position of ‘national’ and ‘local’ companies, market shares, strengths and weaknesses, leading companies. Changes in market structure over last 2/3 years.

GENERAL/FUTURE PROSPECTS

• Review of product standards – improvements in recent years and future changes.
• Design changes – glass, hardware, higher security etc – possible future developments.
• Developments within major product groups – market saturation levels, new areas of growth, niche sectors. Material and distribution trends. Growth of Housing Associations.
• Economic influences and growth prospects - longer term growth prospects up to 2004.

The report contains over 90 pages of ORIGINAL research and comment of the UK Replacement Door and Window industry and provides incisive and though provoking views on its future development.

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EXECUTIVE SUMMARY

Until 1997, the performance of the replacement window has generally been closely linked with the UK economy. Low inflation and interest rates, rising real incomes, a buoyant housing market and high levels of consumer confidence usually combine to provide a strong framework for the replacement window market.

However, 1999/2000 has proved to be a difficult period for the market. While volumes have shown modest growth, the value of the market has been flat, reflecting competitive pricing throughout the supply chain.

Source: AMA Research/Trade Estimates

The chart illustrates clearly the changing fortunes of the replacement window market over the last decade. Rapid growth in the late 1980’s was followed by a severe downturn, with a slow recovery achieved since the depths of 1992.

Market performance in 1998-2000 has shown marginal growth in terms of value, though the underlying volumes have increased more strongly. Pressure on retail prices has remained intense despite more buoyant demand, depressing margins for companies throughout the supply chain.

Forecasts for 2001-3 show a small increase, primarily driven by the need to increase average installed prices, rather than any volume growth. The recent substantial increases in PVC resin, glass and hardware prices cannot be continually absorbed without serious implications for suppliers, fabricators and installation companies and our forecast assumes some increases in retail prices are implemented.

PVC-U’s share of the market has now levelled out at over 85 percent in the window market, while aluminium has continued to lose share and now accounts for around 5 percent of the domestic replacement market, with wood also accounting for a small share.

Potential for further share gains for PVC-U in the domestic window market however, are restricted as the material has reached saturation level, with future growth for PVC-U developing from new housing and commercial sectors. New housing, in particular, has grown strongly, with PVC-U now accounting for well over 50 percent of demand in the sector.

Aluminium has a higher share of the door market in the direct sell sector, though PVC-U continues to increase share in both entrance and patio doors, with 84 percent and 68 percent shares respectively.

Timber continues to dominate the entrance door market with a high percentage of the indirect market sector. In the public sector, timber windows are continuing to lose share as PVC-U gains wider acceptance, but composite materials and steel are rapidly gaining acceptance in the entrance door sector offering benefits of security, thermal performance and durability.

Housing associations now account for around 25 percent of ‘public’ sector demand for replacement windows, with a total housing stock of over 1.5 million properties in 1999. PVC-U is the preferred replacement framing material in this sector due to the need to reduce maintenance cycles, though some Housing Associations are specifying timber on environmental grounds.

The PVC-U systems market has experienced some major restructuring over the last 2-3 years. HW Systems, part of the Heywood Williams Group, have now emerged as clear market leaders following their acquisition of Spectus. WHS/Halo, Profile 22, LB Plastics etc also remain leading suppliers in this sector, while Deceuninck have also gained share following the acquisition of Status Systems.

Further rationalization is anticipated as pressure on margins increase. Caradon have withdrawn from the door and window sector, while some of the smaller, independent systems companies are likely to be acquired by larger groups.

The aluminium systems market has experienced even more rationalization with Monarch now dominating the aluminium systems sector.

The timber products market is dominated by John Carr (now owned by Jen-Weld), Premdor and Magnet with many large, regional based companies supplying through Builders Merchants, Joinery Centres and DIY outlets. Many leading timber specialists now offer PVC-U products reflecting growing use in the new build market, e.g. Jewsons are now supplied by Heywood Williams.

Anglian and Everest are still the two major national retail companies, with Coldseal (part of Heywood Williams) rapidly gaining some market share in the late 1990s. The larger companies have weathered the recession and recent pricing pressures more successfully, with smaller under-capitalised companies suffering more substantially from market conditions.

Further rationalization of the industry is likely to occur in the short/medium term reflecting a more mature market structure. Fabrication and installation is likely to become increasingly segregated as economies of scale in production gain increasing importance with the last 3 years seeing the emergence of a network of ‘super-fabricators’ such as Shepley, Speedframe, Sash, Whiteline, Corby, etc.

Text © 2001 AMA Research

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Last updated by Paul Tucker 20th March 2001