AM26043

AMA RESEARCH MARKET REPORT : Ceilings and Partitions : July 2003

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BRIEF DESCRIPTION

AMA Research have published the 4th Edition of the 'Suspended Ceilings and Partitioning Systems Market - UK 2003-2006' - providing an informed, up-to-date and detailed review of the market, it offers excellent value for money.

These markets are substantial in value terms, but market conditions have been more difficult over the last 2 years, primarily due to a downturn in the commercial construction sector.

The report provides a detailed analysis of the following sectors:-

SUSPENDED CEILINGS

PARTITIONING SYSTEMS

Operable Wall/Folding Partitions

Monobloc

'Other' demountable/relocatable - glazed, bi-bloc, storage wall

EXECUTIVE SUMMARY

The market for suspended ceilings and partitioning systems was worth an estimated £308m at manufacturers selling prices in 2002, representing a growth of around 7% over 2000. These markets have been very volatile, though growth has been sustained at a steady rate in recent years.

During the difficult recession period of the early - 1990s, demand for ceilings and partitioning systems declined substantially. Office construction fell by over 50% with refurbishment activity also badly affected, which had a negative impact on a wide range of building products during this period.

The market began to recover from 1994 onwards, but it was not until 1997 that the market showed significant growth, due to a more buoyant construction sector. Since 1999, the market has seen lower growth rates of between 3 - 5%, reflecting the general downturn in the economy and a difficult property market, with slower growth levels in construction output in 1999 - 2000. Although contractors' output for new work and RMI continued to grow in 2001, especially in the office construction sector, 2002 saw very low levels of growth reflecting the decline in new build office projects and a fall in confidence levels.

However, the public sector has benefited from substantial increases in investment in health and education from the Government in the last few years and will continue to do so, contributing to future growth in the suspended ceilings and partitioning market. Offices, retail and leisure sectors have also seen positive growth in investment.

In 2002, suspended ceilings are valued at approximately £151m, having experienced growth of around 8% since 2000. The sector has performed better than the relocatable partitioning market in recent years due to their use in a wider range of end-use sectors, which makes the market less susceptible to difficult economic conditions and less reliant on the vagiaries of the office construction market.

However, the major end-use sector for ceilings is offices, accounting for an estimated 44% share of the market, followed by the retail, health, entertainment, education, industrial and other sectors. The office construction sector has now recovered from its decline in the early 1990's although a recent decline in office development in London is adversely affecting construction levels in the short to medium term. The entertainment and retail sectors have also achieved growth in recent years and, together with airport construction, have further benefited this market.

In terms of key product sectors, there are five main types of ceiling tiles - wet felt/mineral fibre and soft fibre (which together are estimated to account for 68% of the market), metal, open-cell and others, e.g. plaster.

Trading up has continued to be a feature in the suspended ceilings market, especially in the growth of soft fibre and metal ceilings at the expense of traditional wet-felt mineral fibre. Gypsum-based ceiling tiles and plasterboard have also seen growth at the expense of mineral fibre. Open-cell ceilings systems have seen a decline in share mainly due to a continued trend towards smoother ceiling surfaces.

The market for partitioning systems is valued at £157m in 2002 and is heavily reliant on the office sector, with estimated growth of only 6% over 2000. However, the partitions market is expected to experience decline in 2003 due mainly to the decline in new build office construction, and refurbishment projects, particularly in London.

The market is comprised of three major sectors - Monobloc, operable walls/folding partitions and 'other' demountable/relocatable partitions. Monobloc partitioning has seen lower levels of growth in the past 2 years due to their relatively high price and less demand for premium office space, especially as these partitions are high quality products aimed at the upper end of the market and installed particularly in prestigious offices. Within the 'other' demountable/relocatable sector, there has been growth in demand for bi-bloc partitioning which is flexible and allows each side of the partition to be decorated differently. Glass 'frameless' partitioning has also been a growth area as the trend towards open-plan offices with flexible partitioning continues. Operable walls have also been a relatively buoyant sector, with some growth in acoustic products.

Short to medium-term prospects for partitioning systems are relatively pessimistic with the market estimated to decline or remain flat until 2006, with future demand largely influenced by the timing and extent of a recovery in the office sector in the South-East.

The suspended ceilings and partitioning market has a complex supply and distribution structure, reflecting the wide range of materials involved. There are many companies operating in the market, supplying a wide range of end use sectors, particularly for suspended ceilings.

Companies operating in this market include raw material suppliers through to manufacturers and distributors, with a substantial element of vertical integration. The major distributors sell a range of products including those they manufacture themselves and sell under their own brand name, products manufactured by other companies and sold under the distributors own name, and branded ranges from other manufacturers.

In terms of suspended ceilings, major companies are Armstrong World Industries, USG (UK), SAS International, Saint-Gobain Ecophon, CEP Ceilings, Burgess Architectural Products, Rockfon and Hunter Douglas.

In terms of partitioning systems, major suppliers are Komfort Office Environments, Thrislington Engineering, Clestra Hauserman, Dexion, C P Supplies, Unilock, Montage Partitions 2000, Neslo Partitioning and Interiors, Optima and Alco-Beldan. Unilock were acquired by HL Smith Construction in 2003, with Optima also part of the group.

At distributor level, the market is relatively concentrated. Major distributors are Commercial Ceiling Factors (CCF) who lead the market with an estimated 29%, Komfort Office Environments, C P Supplies, Ceilings Distribution, Nevill Long, Capco Interior Supplies and Encon Interior Systems.

LIST OF CONTENTS

1	INTRODUCTION
2	SUMMARY
3	KEY MARKET INFLUENCES - MACRO AND MICRO
3.1	MACRO-ECONOMIC INFLUENCES
3.1.1	GDP
3.1.2	Inflation & Interest Rates
3.1.3	Unemployment & Consumer Spending
3.1.4	Consumers Disposable Income Levels And Savings
3.1.5	Population
3.2	THE HOUSING MARKET
3.2.1	New House Build
3.2.2	House Moving Levels
3.2.3	Household Demographics
4	MARKET
4.1	DEFINITION
4.2	TOTAL MARKET SIZE
4.3	MARKET HISTORY
4.4	CURRENT SITUATION
4.5	FUTURE PROSPECTS
4.5.1	Overall Trends
4.5.2	Fire Protection Standards
4.5.3	Working Practices
5	PRODUCTS
5.1	PRODUCT MIX
5.2	SUSPENDED CEILINGS
5.2.1	Market Size
5.2.2	Historical Trends
5.2.3	Current Situation
5.2.4	End-Use Sectors
5.2.5	Suspended Ceiling Grids And Tiles
5.2.6	Future Prospects
5.3	PARTITIONING SYSTEMS
5.3.1	Definition
5.3.2	Market Size
5.3.3	Historical Trends
5.3.4	Current Situation
5.3.5	Product Mix
5.3.6	Future Prospects
6	SUPPLIERS & DISTRIBUTION
6.1	OVERALL SUPPLY MARKET
6.2	MATERIAL SUPPLIERS
6.3	MANUFACTURERS
6.3.1	Introduction To Manufacturers
6.3.2	Suspended Ceilings
6.3.3	Partitioning Systems
6.4	DISTRIBUTORS
6.5	CONTRACTORS
6.6	THE BUYING PROCESS
6.7	END-USE SECTORS
6.7.1	Offices
6.7.2	Entertainment
6.7.3	Education
6.7.4	Health
6.7.5	Industrial
6.7.6	Retail
6.7.7	Others
7	FUTURE PROSPECTS
7.1	ECONOMIC BACKGROUND
7.2	SUSPENDED CEILINGS
7.3	PARTITIONING
7.4	SUPPLIERS AND DISTRIBUTION

Tables and Charts

Text © 2003 AMA Research

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Last updated by Amanda Porteous 2003