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AM26039

AMA ROOFING & INSULATION JANUARY 1999

Overview

This report covers:

Companies covered include:

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Key Areas

Executive Summary

Table of Contents

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KEY AREAS

The report contains over 120 pages and 30 tables and charts of ORIGINAL research and comment on the UK Roofing & Insulation industry and provides an objective, independent and incisive view into this changing industry.

Key areas of coverage in the report include:-

ROOFING

• The Roofing Market - mix by product - roofing tiles, membranes/underlay felts, metal roofing and roof glazing.
• The market for Roofing Tiles by value 1992-98, key influencing factors, future prospects, forecast to 2002.
• The market for concrete tiles, by value, key influences, future prospects. Production, deliveries and stock of concrete tiles.
• The market for clay tiles, by value, key influences, future prospects.
• The market for fibre-cement roofing by value and levels of production, deliveries and stock.
• The market for slate tiles, by value and volume, key influences and growth factors.
• The UK roof membrane and underlay felts market, by value 1992-2002, key issues, areas of growth, key application areas.
• Product mix, profiled sheeting/tiles and fully supported roof systems, future prospects.
• International trade in roof tiles and flat roofing products.
• Roof glazing market size and trends 1997-2002, key issues, key applications.
• Product mix, atrium/mall glazing, rooflights, patent glazing.

INSULATION

• Market size by value from 1992 through to 1998, factors influencing market trends, major reasons for market performance.
• Current market situations, factors underpinning growth, influence of building regulation changes, future prospects, key factors, forecast to 2002.
• International Trade - Imports and Exports of mineral and glass fibre products.
• Market sector analysis - material mix, mineral, foam, others.
• Mineral Fibre - sector performance, future prospects, key advantages, rock/glass.
• Polyurethane, Polyisocyanurate, Phenolic foams - sector performance growth/decline, key advantages.
• Polystyrene foam - sector performance, advantages/disadvantages, future prospects.
• Other product sectors.
• Key insulation applications in both structural and non-structural areas. Mix of major application areas.

SUPPLIERS/DISTRIBUTION

• Roofing Tiles - major suppliers market shares, key suppliers backgrounds, strengths, weaknesses, other suppliers.
• Roofing membranes and underlay felts - major suppliers market shares, key suppliers backgrounds, strengths, weaknesses, other suppliers.
• Metal Roofing - major suppliers market shares, key suppliers backgrounds, strengths, weaknesses, other suppliers.
• Roof glazing - key suppliers backgrounds, strengths and weaknesses.
• Insulation - major suppliers market shares, key suppliers backgrounds, strengths, weaknesses, other suppliers.
• Overall distribution structure of the roofing and insulation market.
• National Insulation Distributors - key companies, backgrounds etc.
• Builders Merchants - their role in roofing and insulation products, key merchants.
• Specialist distributors & roof centres, DIY outlets, Others.
• Housebuilders & Contractors.

KEY INFLUENCES/FUTURE PROSPECTS

• Key external influencing factors on the roofing and insulation markets - housing completions, construction output, property transactions etc.
• Prospects for the future, short/medium term, new market niches, changes in distribution, areas of potential growth/decline.

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EXECUTIVE SUMMARY

The UK Roofing and Insulation Market

Source: AMA Research/Trade Estimates

The chart shows the industry to have experienced a difficult period in the early 1990’s, as a result of the economic recession, with 1993 and 1994 showing signs of recovery. Interest rate rises and a lack of underlying consumer and business confidence meant that this recovery was unsustainable in 1995.

1996 saw a nominal 5 percent increase in total construction output, followed by a 5.6 percent rise in 1997. In real terms, however, market growth was limited to 1 percent and 2.3 percent in 1996 and 1997 respectively.

The strongest growth has been in the private housebuilding, industrial and commercial sectors, which, in real terms, increased by 16 percent, 12 percent and 16 percent respectively. Together, these account for about 37 percent of the total market, including infra-structure. In comparison, the RMI sector was relatively weak, especially in the public sector.

However, in recent months there has been a reversal in trends. While the commercial sector continues to be buoyant, orders for new work are expected to slow down towards the end of 1999 once projects with scheduled completions before the turn of the millennium have finished.

Lack of confidence in the world economy, together with the strong pound in 1998, have already had a negative impact on the manufacturing sector. New orders placed by the industrial sector, for the first half of 1998, were down by 4.4 percent on the previous six months.

The public sector is expected to improve substantially over the next few years, resulting from Private Finance Initiative (PFI) projects and the Capital Receipts Initiative (CRI). Under the CRI £174 million was released to Local Authorities to help meet lower housing and associated regeneration needs. Another £610 million has been pledged for 1998/1999. Since 1988 over £13 billion has been levered in to support social housing, the principal sources being the Housing Corporation’s Approval

Development Programme (APD) the Housing Transfer Programme and Local Authorities.

In the public non-housing sector some £7 billion has been committed under the PFI towards new build and extensive RMI work in both the health and education sectors over the next three years. However, as the public sector currently only accounts for just around 25 percent of total construction output, it is unlikely to be sufficient to offset the expected downturn in the private sector.

Roofing Products

The roofing market can be broadly split between pitched roofing and flat roofing. By volume, the former accounts for about 75 percent of the market, with the latter constituting the other 25 percent. This, in part, reflects the larger area of material required to cover a pitched roof than a flat roof of equivalent horizontal dimensions.

Consequently, roof tiling systems constitute the largest sector comprising concrete, clay, slate and fibre-cement products plus accessories. The largest shares by value, are held by concrete tiles at 65 percent though there is a trend to the more natural product, in particular to clay tiles. Not included are metal tile sheets made to look like roof tiles and slates.

Metal roofing systems have grown share in recent years replacing more traditional commercial and industrial roofing products. Profiled sheeting remains the largest share of the market, though self-supported systems have developed positively. Profiled sheets replicating tiles have grown in share, motivated by increased use in major DIY/grocery outlets and the development of industrial/business parks.

Membranes and under-tile felts have followed different patterns with membrane more closely aligned to the flat roof market which is under pressure from a trend to pitched roofs. Under-tile felts follow the pitched roof sector more closely and have been performing more positively.

Both sectors are witnessing material and composition changes in the products as companies endeavour to provide products offering a wider range of features, and this is providing added-value marketing opportunities.

The key suppliers in the roofing sector include Redland and Marley, with Redland strong in tiles while Marley are strong in tiles and flat roofing products. Eternit, Sandtoft, Russell and Keymer are also major suppliers of roof tiles to the UK market.

The rooftile manufacturing sector has been subject to major changes, with both Redland and Marley having recently been taken over by major European competitors.

Consolidation has also been a feature of the metal roofing sector. Following the acquisition of Ward Building Systems by Kingspan, HH Robertson was bought up by British Steel, which merged its composite panels business with European Profiles, one of the two British Steel subsidiaries in this report.

Another major fabricator, Broderick Structures, was subject to a management buyout from Ruberoid Plc in 1998, while the Dutch parent of Hoogovens Building Systems purchased Coseley Panel products in November 1998. Other key metal roofing suppliers include Precision Metal Forming, Sogem, TAC Metal Forming, Lee Steel Strip and Hoogovens.

In the membrane and under-tile felt sector, Ruberoid, Callenders and Marley are the leaders with Anderson, Asphaltic and Vulcanite also strong.

The distribution of roofing products is largely through the builders merchants, though other channels include direct to contractor and through distributors and roofing centres. In addition, certain DIY multiples also compete, such as B & Q Warehouse and Wickes.

Insulation Products

The insulation market has shown a relatively positive underlying growth trend, though the industry did suffer in the early part of the 1990s.

There are a number of factors supporting underlying growth in this sector:

• Impact of the building regulation changes in 1995.

• Increasing awareness of insulation benefits - efficiency etc.

• Impact of Energy Conservation Act, Energy Trust etc.

• Awareness of benefits of acoustic and fire protection insulation.

• ‘Warm roof’ constructions.

• Integration of insulation with other board products.

In addition to the above, the overall construction and economic background appears likely to provide a sound framework for growth over the next few years.

The key materials in use include mineral (glass or rock), plastics (polystyrene, polyurethane, polyisocyanurates, etc) and some element of cork. The mineral products account for over half the market and have grown share slightly in recent years, reflecting their better resistance to fire. Rock wool has taken share from glass in this period reflecting minerals increased use in cavity walls, often as a slab based product. Plastic and foam products can have good insulation products for relatively thin section, a factor which has underpinned this material’s share of the market, but static growth in the flat roofing sector has had an impact upon demand for polyurethane foam insulation.

Key suppliers of insulation include Owens Corning, Rockwool, Kingspan with Vencel Resil, Callenders, Gypsum Isover and Superglass also important. While these leading companies account for around 65 percent of the market, there are a wide range of other companies supplying insulation of some kind.

Distribution of insulation products is led by the specialist distributors such as SIG and Encon. SIG has grown considerably since 1996, partly due to several acquisitions, both in the UK and overseas, including that of Asphaltic Roofing Supplies, the UK’s leading specialist roofing products supplier. These companies hold stocks across the increasingly complex and wide ranging product profile, therefore providing contractors and merchants with a rapid source of supply, even on specialist product areas. Merchants are also an important channel, though they tend to be stronger on traditional structural insulation for domestic applications.

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Text © 1999 AMA Research

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Last updated by Jacob van Eldik 27th January 2000