AM26013

AMA RESEARCH Market Report : UK Replacement Doors and Windows: July 2003

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Introduction and Overview

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.

Market saturation is a key issue for the replacement sector and there are many significant implications for the industry in the medium term in terms of material usage, price levels, changing supply and distribution structures etc, which are reviewed in the report.

Of particular interest:

Market activity levels in 2000-03

Material usage trends in all product sectors - growth of composite doors etc.

Review of distribution structure - changes in PVC-U systems supply.

Market trends in the private and public sectors.

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 1986-2002 and forecasts of future trends within each product group up to 2006.

Analysis of market in 1998-2002 - 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.

Market penetration levels - 1981-2002 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, Composite and Timber frames by each product - emphasis on double-glazing market.

Future use of PVC-U - will it continue in the medium term - or reaching saturation levels in some product sectors? Areas of strength for aluminium/timber.

Trends in usage 1986-2002, forecasts of future developments - opportunity/threats (impact of composites on entrance door market).

Key influences on materials trends - cost differences, marketing and promotional strategies affecting material shares. Prospects for aluminium, timber, composites 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 - 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, impact of Part L 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 - growth prospects up to 2006.

Executive Summary

Up to the mid-1990s, the performance of the replacement window market 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, in the last 5-6 years this link has been broken with sales relatively flat since 1997.

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 2001-02 has shown marginal growth in terms of value, but pressure on retail prices has remained intense, depressing margins for companies throughout the supply chain.

Forecasts for 2003-06 indicate a marginal decline in the overall market reflecting a combination of market saturation and continuing pressure on prices. With household ownership of double-glazing at high levels, the market will become increasingly dependent on 2nd/3rd time replacements of products installed in the 1970s/1980s.

PVC-U's share of the market has now levelled out at around 90% in the window market, while aluminium has continued to lose share and now accounts for less than 5% of the domestic replacement market, with wood also accounting for a small share.

Given this high 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 over 80% of installations, but with obvious implications for replacement demand in the longer term.

Aluminium has a higher share of the door market in the direct sell sector, though the major area of change in the entrance door market is the rapid growth of composites, primarily in new build and public replacement at this stage through growth in the private sector is anticipated.

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 with little indication of any significant recovery in this sector, or new build.

Housing associations now account for around 25% of 'public' sector demand for replacement windows, with a total housing stock of over 1.6 million properties in 2002. 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, are market leaders following their acquisition of Spectus. Other major players include Rehau, Deceuninck, Bowater, LB Plastics etc., while Synseal and Duraflex have enjoyed strong growth in the last 2-3 years.

Further rationalization in the systems supply market is anticipated as pressure on margins increase, which may result in the withdrawal of some PLCs in the sector, while some of the smaller, independent systems companies are likely to be acquired by larger groups.

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 Bowater, Safestyle and Coldseal (part of Heywood Williams) also leading players. 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.

Companies Mentioned

100 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. 

List of Contents

1	INTRODUCTION
2	SUMMARY
3	ECONOMIC SUMMARY
3.1	GDP
3.2	INFLATION & INTEREST RATES
3.3	UNEMPLOYMENT
3.4	HOUSEHOLD CONSUMPTION
3.5	HOUSING & CONSTRUCTION
3.6	STERLING
3.7	POPULATION PROFILE
3.8	CONCLUSIONS
4	THE MARKET
4.1	MARKET SIZE
4.1.1	Market Definition
4.1.2	Market Background
4.1.3	Market Size
4.1.4	Product Mix
4.2	MARKET VOLUMES
4.2.1	Windows
4.2.2	Household Penetration Levels
4.3	MATERIALS
4.3.1	Windows
4.3.2	Patio Doors
4.3.3	Residential Doors
4.4	OVERALL SUMMARY ON FRAME MATERIALS
5	SUPPLY AND DISTRIBUTION
5.1	DISTRIBUTION OF FRAME MATERIALS
5.1.1	PVC-U
5.1.2	Aluminium
5.1.3	Timber
5.1.4	Composites
5.2	RETAIL DISTRIBUTION
6	PRODUCT DEVELOPMENT & KEY ISSUES
6.1	SECURITY
6.2	PRODUCT RANGE
6.3	OTHER PRODUCT DEVELOPMENTS
6.4	NEW MATERIALS
6.5	STANDARDS
6.6	RECYCLING
7	FUTURE PROSPECTS

Tables and Charts

Text © 2004 AMA Research

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Last updated by Amanda Porteous 2004