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The market for abrasive products is diffuse both in terms of the size of manufacturing organisations and product end uses. The total market in 1997 is forecast to be £305m at manufacturers' prices which represents an increase of around 5 percent over the previous year.
The market growth was more rapid through 1994, 1995 to 1996 than in the forecast figures to the end of the century.
This earlier growth is attributed to an initially rapid recovery in engineering manufacturing output in 1994 and 1995 which slowed in early 1996. During this earlier period, consumer demand for DIY abrasive products also began to increase, and it has continued to increase over subsequent years.
Consumer growth in demand for DIY abrasive products is estimated to peak in 1997 as increasing interest rates may dampen consumer-led growth, however modest further growth is likely, thus motivating the abrasives market.
Consumer demand for other finished goods, such as cars or furniture, is likely to stimulate demand for abrasives in engineering or industrial applications. In addition, further capital investment in automotive companies or other industrial companies may lead to increased use of abrasives in industry, in the medium term future. The strength in the Pound Sterling is however likely to dampen the competitive edge of those exporting companies and this factor is likely to constrain growth in engineering abrasives.
Growth in the UK building and construction sector, in terms of new housebuild and RMI will underpin growth in the abrasives market as these sectors are expected to show good growth in the medium term future.
Projected growth for abrasives in 1997-2000 has been conservatively forecast at around 3 percent, taking into account forecasts for the Engineering Manufacturing Industry (3.1 percent) and the estimated continuing high level of exports and imports. For comparison, GDP growth is estimated at around 3.6 percent for 1997 and 2.3 percent in 1988.
The three key sectors of the UK abrasives market, under our definition are "coated", "bonded" and "superabrasives". The sectors hold similar shares of the market, though coated and superabrasives are considered to take larger shares.
The largest market shares of coated products were achieved by 3M, Unicorn and Carborundum. The principal suppliers to the bonded market were headed by Unicorn and Carborundum, whilst in the superabrasives field Unicorn, 3M and Nimbus Diamond Tool and Machine Company were identified as the major players.
In overall terms, two organisations lead the abrasives industry - Carborundum Abrasives GB Ltd, and Unicorn International Plc. However, there are a large number of manufacturers and suppliers, other major players including 3M, Norton, Arrow, Hermes, Tyrolit and Flexovit, and in addition there are substantial imports.
There is a trend toward greater concentration in the abrasives industry and during 1996 and 1997 Carborundum/Hopkinson acquired a number of abrasives manufacturers, suppliers and distributors. More recently Unicorn have themselves been acquired.
Distribution of abrasive products is served by a web of dealers and trade outlets reflecting the many and varied end uses. To illustrate the range of the distribution network, home and handyman outlets for sandpaper include the DIY Multiples, independent retailers and builders merchants, whilst grinding wheels for manufacturing purposes are catered for by the provincial Engineers Merchants and wholesalers and abrasives specialists. Tool hire outlets - of which there are 3200 in the UK - accounted for a significant share of the sales of grinders and cutting tools in 1996, and these outlets are growing at the rate of 5-7 percent per annum.
One of the largest abrasives manufacturers - Carborundum - own a number of regional and provincial stockists whilst Unicorn and 3M pre-pack DIY and trade products, distributing (in this market segment) through DIY Multiples and Builders Merchants.
Major distribution channels include Abrasives specialists, Engineers Merchants/Factory Supply Stockists, DIY Multiples, Builders Merchants, Chain Stores, auto-refinishing component distributors and Independent Retailers.
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 © 1997 AMA Research
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