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Table of Contents

Executive Summary

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TABLE OF CONTENTS

1. INTRODUCTION 5

2. SUMMARY 7

3. ECONOMIC ENVIRONMENT 10

3.1 INTRODUCTION 10

3.2 CONSUMER CONFIDENCE 10

3.3 GROWTH AND INTEREST RATES 11

3.4 HOUSING 12

3.5 CONCLUSION 12

4. THE MARKET 13

4.1 MARKET SIZE 13

4.2 MARKET VOLUMES 22

4.3 FRAME MATERIALS 36

4.4 OVERALL SUMMARY ON FRAME MATERIALS 49

5. SUPPLY AND DISTRIBUTION 52

5.1 DISTRIBUTION OF FRAME MATERIALS 52

5.2 RETAIL DISTRIBUTION 70

6. PRODUCT DEVELOPMENT 78

6.1 SECURITY 78

6.2 PRODUCT RANGE 79

6.3 OTHER DEVELOPMENTS 79

7. KEY MARKET INFLUENCES 81

7.1 THE HOUSING MARKET 81

7.3 POPULATION PROFILE 84

7.4 EMPLOYMENT/UNEMPLOYMENT 86

7.5 INTEREST RATES 87

7.6 CONSUMERS DISPOSABLE INCOME LEVELS AND SAVINGS 88

7.7 STOCK OF DWELLINGS 89

7.8 HOUSEHOLDS BY SIZE 91

8. FUTURE PROSPECTS 92

TABLES AND CHARTS

CHART 1: UK REPLACEMENT DOOR & WINDOW MARKET 1985-97 BY VALUE £M RSP

TABLE 2: UK REPLACEMENT DOOR & WINDOW MARKET (£M RSP) 1985-98

CHART 3: UK REPLACEMENT DOOR & WINDOW MARKET (£M RSP) 1985-2002

CHART 4: MARKET VALUE BY PRODUCT ( percent) 1997

CHART 5: VOLUME OF WINDOWS BY SECTOR 1997

TABLE 6: STOCK OF DWELLINGS BY TENURE, HOUSING ASSOCIATIONS IN GREAT BRITAIN 1988 - 1997

TABLE 7: MAJOR HOUSING ASSOCIATIONS IN ENGLAND (1997)

TABLE 8: UK HOME IMPROVEMENT MARKET FOR PATIO DOORS 1986-2002 BY VOLUME

CHART 9: PATIO DOORS VOLUMES 1986-2002

TABLE 10: UK HOME IMPROVEMENT MARKET FOR RESIDENTIAL DOORS 1986-2002

CHART 11: HOME IMPROVEMENT RESIDENTIAL DOOR MARKET 1997 BY SECTOR

CHART 12: HOUSEHOLD PENETRATION LEVEL OF ANY TYPE OF DOUBLE-GLAZING

CHART 13: HOME IMPROVEMENT WINDOW MARKET FRAME MATERIALS 1986-2002

TABLE 14: HOME IMPROVEMENT MARKET - PATIO DOORS - BY MATERIAL 1986-2000

CHART 15: HOME IMPROVEMENT MARKET - PATIO DOORS - BY MATERIAL 1986-2000

TABLE 16: REPLACEMENT ENTRANCE DOOR MARKET - BY MATERIAL (1986-2000)

TABLE 17: DIRECT SELL SECTOR - RESIDENTIAL DOORS - BY MATERIAL 1986-2000

CHART 18: DIRECT SELL SECTOR RESIDENTIAL DOORS BY MATERIAL

CHART 19: CONSERVATORY MARKET - SHARE BY MATERIAL 1998

CHART 20: DISTRIBUTION STRUCTURE - PVC-U DOORS AND WINDOWS

TABLE 21: PVC-U SYSTEMS SUPPLY MARKET SUPPLIER SHARES - 1997

CHART 22: DISTRIBUTION STRUCTURE - ALUMINIUM WINDOWS AND DOORS

TABLE 23: DISTRIBUTION STRUCTURE - TIMBER WINDOWS AND DOORS

CHART 24: DISTRIBUTION OF TIMBER DOORS & WINDOWS - BY VOLUME 1997

CHART 25: DIY MULTIPLES MARKET SHARE

CHART 26: BUILDERS MERCHANTS MARKET SHARES 1997

CHART 27: UK REPLACEMENT DOOR & WINDOW RETAIL SHARES BY VALUE 1997

TABLE 28: RETAIL MARKET SHARE - BY VALUE 1997

TABLE 29: NUMBER OF PROPERTY TRANSACTIONS IN ENGLAND 1990-1997

TABLE 30: HOUSING COMPLETIONS 1990-1997 GREAT BRITAIN ('000)

CHART 31: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION 1996 ('000)

CHART 32: NUMBER OF EMPLOYEES IN EMPLOYMENT GB - JUNE 1981-97 (MILLIONS)

CHART 33: INTEREST RATES AND INFLATION (RPI) FROM 1990-2000

CHART 34: PDI & SAVINGS RATIO

TABLE 35: STOCK OF DWELLINGS GREAT BRITAIN - 1983-1997

CHART 36: MIX OF NUMBER OF PEOPLE PER HOUSEHOLD 1971 & 1995/6

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EXECUTIVE SUMMARY

Despite general economic recovery and a more buoyant period of consumer spending in 1996/7, the replacement window and door market has continued to experience difficult trading conditions. Following several years of decline in the early - mid 1990's, overall market value has improved marginally over the last 2 years to an estimated level of over £2 billion in 1998.

Market performance in 1996/7 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 1998 indicate a small downturn in sales value, with 1999 likely to prove a more difficult year. The deteriorating world economic climate is already showing a negative impact on consumer spending, with replacement windows anticipated to suffer accordingly due to their 'postponable' nature.

PVC-U has continued to increase market share and will account for over 85 percent of the replacement window market by 1998 (and over 90 percent of the direct sell sector). 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 reaches saturation level, with future growth for PVC-U developing from new housing and commercial sectors.

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. 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 20 percent of 'public' sector demand for replacement windows. PVC-U is the preferred replacement framing material in this sector due to the need to reduce maintenance cycles.

The PVC-U systems market has experienced some restructuring over the last 2-3 years. HW Systems, part of the Heywood Williams Group, have now emerged as clear market leaders following their recent acquisition of Spectus. WHS/Halo, Profile 22, LB Plastics etc also remain leading suppliers in this sector. Further rationalization is anticipated as pressure on margins increase. Caradon have recently announced their intention to withdraw from the door and window 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 Joinery, Premdoor 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. Competitive pressures in the timber market are also intense with Spring Ram disposing of their Premdoor operation and the recent acquisition of Boulton & Paul by Rugby Group and its subsequent integration with John Carr.

Anglian and Caradon Everest are still the two major national retail companies, with Coldseal (part of Heywood Williams) rapidly gaining market share in recent years. Bowater, BAC Windows, Aspen, CR Smith are the other national or large regional organizations. 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 etc.

This comprehensive report represents a detailed assessment of the market, reviewing major trends, key factors influencing developments and future prospects for the sector. Analysis is both quantitative and qualitative, based on our substantial experience of the building and home improvement markets.

Text © 1998 AMA Research

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