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Table of Contents

Executive Summary

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TABLE OF CONTENTS

1. INTRODUCTION 5

2. SUMMARY 6

3. ECONOMIC ENVIRONMENT 9

3.1 INTRODUCTION 9

3.2 GROWTH 9

3.3 INTEREST RATES 10

3.4 INVESTMENT 10

3.5 BUILDING & CONSTRUCTION 10

3.6 CONSUMER & BUSINESS CONFIDENCE 11

3.7 CONCLUSION 11

4. THE UK MARKET FOR ELECTRICITY GENERATING SETS 12

4.1 MARKET DEFINITION 12

4.2 MARKET SIZE 13

4.3 UK PRODUCTION OF GENERATORS 20

4.4 INTERNATIONAL TRADE IN GENERATING SETS 23

5. PRODUCT SEGMENTATION 29

5.1 PRODUCT TYPES 29

5.2 PRODUCT SEGMENTATION BY GENERATOR RATING 42

5.3 END-USE APPLICATIONS 46

6. DISTRIBUTION CHANNELS 62

6.1 DISTRIBUTION MIX AND STRUCTURE 62

6.2 DISTRIBUTION CHANNELS 64

7. MAJOR SUPPLIERS OF GENERATING SETS 71

7.1 GENSET MANUFACTURING AND SUPPLIERS 71

7.2 MAJOR SUPPLIERS 72

8. KEY MARKET INFLUENCES 81

8.1 INDUSTRIAL SECTORS 81

8.2 CONSTRUCTION 89

8.3 GENERAL 93

9. FUTURE PROSPECTS 99

TABLES AND CHARTS

CHART 1: UK GENSET MARKET 1993-2002 (£M MSP)

TABLE 2: THE SIZE OF THE UK MARKET FOR GENERATING SETS, 1993-98, £M MSP

TABLE 3: THE UK MARKET FORECAST (£M MSP)

CHART 4: THE UK MARKET FOR ELECTRICITY GENERATING SETS AT CONSTANT 1994 PRICES £M MSP

TABLE 5: UK PRODUCTION OF GENERATORS UP TO 750KVA 1994-1999 £M

TABLE 6: ANALYSIS OF UK MANUFACTURERS SALES OF GENERATING SETS

TABLE 7: IMPORTS/EXPORTS OF GENSETS (£M)

TABLE 8: IMPORTS AND EXPORTS OF GENSETS £M

TABLE 9: SEGMENTATION OF THE UK GENERATING SET MARKET 1997 AT £M MSP

CHART 10: ESTIMATED SALES OF GENSETS BY SELECTED RATING CATEGORIES FOR 1997

TABLE 11: MIX OF END-USE APPLICATIONS FOR GENSETS IN THE UK MARKET

TABLE 12: CAPITAL EXPENDITURE BY THE UK WATER COMPANIES 1990/1991 TO 1995/1996 (£M)

TABLE 13: GENSET MANUFACTURERS' SALES BY DISTRIBUTION CHANNELS

CHART 14: DISTRIBUTION STRUCTURE OF THE UK MARKET FOR ELECTRICITY GENERATING SETS

CHART 15: KEY SUPPLIERS - MARKET SHARES BY VALUE

TABLE 16: ENGINEERING SALES OUTPUT CHANGES

TABLE 17: ENGINEERING OUTPUT BY SIC CODE £BN AT CURRENT PRICES 1993-1998

TABLE 18: ENGINEERING OUTPUT BY SIC CODE £BN 1993-1998

TABLE 19: THE PRODUCTION OF CARS & COMMERCIAL VEHICLES IN THE UK 1990-1996

TABLE 20: SALES BY THE PUBLIC ELECTRICITY SUPPLIERS

TABLE 21: CONTRACTORS OUTPUT - NEW WORK AND RMI NON HOUSING - CURRENT PRICES (£M)

TABLE 22: NEW ORDERS OBTAINED BY CONTRACTORS 1990-1997 CURRENT PRICES

TABLE 23: CONTRACTORS OUTPUT - COMMERCIAL SECTOR NEW WORK - CURRENT PRICES (£M)

CHART 24: INTEREST RATES AND INFLATION (RPI) FROM 1990-2000

CHART 25: PDI & SAVINGS RATIO

CHART 26: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION 1996 ('000)

CHART 27: NUMBER OF EMPLOYEES IN EMPLOYMENT GB - JUNE 1981-96 (MILLIONS)

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EXECUTIVE SUMMARY

The UK generating set market, up to 750 KVA, is extremely diffuse in terms of end-uses but is becoming increasingly concentrated in the manufacturing sector. Currently, the manufacturing sector is characterised by a small number of large companies, with predominantly American ownership, and many small, independent companies supplying generating sets for a variety of applications, including specialist uses.

The total market in 1997 is estimated to be £200m at manufacturer's prices, which represents an increase of around 8 percent over the previous year.

Growth increased steadily between 1993 and 1997, though is now slowing. Projected annual growth for generating sets 1998-2000 has been conservatively forecast at around 3-4 percent, taking into account growth forecasts for the Engineering Manufacturing Industry (0.5 percent), and the influences of trends in the end-use sectors. Projected development in 2001 and 2002 is estimated to be in the region of 7-8 percent as a result of the forecast improvement in the UK economy.

The generating set market (up to 750 KVA) is influenced by a variety of factors, both at the macro and micro level. Macro factors include the influence of the major end-use sectors such as water and sewage, oil and gas, marine and industrial, including construction and chemical/petro-chemical. Whilst some sectors are growing, others are stable or declining in overall terms. Macro factors also include genset integration with computer technology, via UPS-linked systems.

Micro factors are favourable for market growth, in so far as:-

• Gas engines enable gensets to penetrate new market areas, often through more acceptable emissions levels and "cleaner" exhaust gasses for heat recovery units, for example combined heat and power units, use of landfill gas, sewage etc.
• Combined Heat and Power Installations - either gas or diesel - enable gensets to penetrate new market areas.
• Development of control and remote monitoring systems enhances gensets competitiveness compared with other electricity suppliers.

It is forecast that expansion of the UK genset market will principally be driven by:-

• Wider applications of computer control and the need for UPS systems incorporating a standby generator.
• Construction activity in relation to:-

• The Millennium
• Renewal of fossil-fuelled power stations
• Railway projects e.g. Jubilee Line extension
• Railtrack's £16bn renewal programme
• Commercial construction projects

The key sectors of the UK genset market, according to our definition, consist of generating sets and their derivatives such as Marine Generating sets, Small industrial Domestic and Leisure sets, Co-generation sets and 'Others' including Aeroplane ground support units etc.

There are several major suppliers to one or more of these sectors including F G Wilson Engineering, Cummins Power Generation, Caterpillar (including Perkins), the TT Group (with Dale Electric, Dawson Keith etc), SDMO (Importer), Honda and others.

There is a trend towards greater concentration in the UK genset industry, for example, during 1998, Caterpillar took over Perkins (Varity Perkins). There is also a move towards globalisation and links with competitors to provide partnerships to develop new products and markets. Globalisation also takes the form of establishing manufacturing subsidiaries in foreign countries - one of the advantages being the varying strength of the local currency does not affect profitability to the same extent as a fully UK supplied operation.

The distribution of gensets in the UK is served by Independent Distributors, Manufacturers' agents/dealers, Genset specialists and Plant and Tool Hire in "Hire and Sale", Direct/OEM, Marine and Agriculture 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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