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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 10

3.1 GENERAL 10

3.2 GROWTH AND INTEREST RATES 10

3.3 BUILDING & CONSTRUCTION 11

3.4 CONCLUSION 11

4. THE MARKET 12

4.1 MARKET DEFINITION 12

4.2 MARKET HISTORY 14

4.3 PREFABRICATED BUILDINGS PRODUCT MIX 1997 19

4.4 DISTRIBUTION 21

4.5 END USE SECTORS DEFINITION 23

4.6 END USER SECTOR FORECASTS 49

4.7 MARKET SECTOR SPECIFICATION ISSUES 51

5. SUPPLIERS 58

5.1 MARKET SHARES 58

5.2 SUPPLIER PROFILES 59

6. KEY MARKET INFLUENCES 66

6.1 THE HOUSING MARKET 66

6.2 POPULATION PROFILE 69

6.3 EMPLOYMENT/UNEMPLOYMENT 70

6.4 INTEREST RATES 71

6.5 CONSUMER DISPOSABLE INCOME LEVELS AND SAVINGS 72

6.6 HOUSEHOLDS BY SIZE 73

7. FUTURE PROSPECTS 74

TABLES AND CHARTS

CHART 1: PREFABRICATED BUILDINGS MARKET 1994-2001 AT £M MSP

TABLE 2: UK PREFABRICATED BUILDING MARKET 1994-2001, BY VALUE £M MSP

CHART 3: PRODUCT MIX IN THE UK PREFABRICATED BUILDINGS MARKET 1997 BY VALUE

CHART 4: DISTRIBUTION STRUCTURE FOR PREFABRICATED BUILDINGS

CHART 5: MIX OF SALES OF PREFABRICATED BUILDINGS TO MAJOR END USER SECTORS BY VALUE 1997

TABLE 6: RELATIVE IMPORTANCE OF SPECIFICATION CRITERIA (SCALE 1-5, 5 BEING MOST IMPORTANT)

TABLE 7: NUMBER OF HIGHER EDUCATION ENROLMENTS IN THE UK 1990-1995

TABLE 8: FIXED CAPITAL EXPENDITURE BY UK INDUSTRY 1991-1997 (£M) AT CURRENT PRICES

TABLE 9: CAPITAL EXPENDITURE BY UK MANUFACTURING INDUSTRY ON NEW BUILDING WORK 1990-1997 (£M CURRENT PRICES)

TABLE 10: HOTEL & FAST FOOD OUTLETS IN THE UK 1995-1997

TABLE 11: MIX OF EDUCATION ESTABLISHMENTS BY TYPE 1996/97

TABLE 12: VALUE AT CURRENT PRICES OF CONTRACTORS OUTPUT - BUILDING WORK FOR SCHOOLS AND UNIVERSITIES 1994-1997 (£M)

TABLE 13: VALUE OF BUILDING WORK IN THE UK PUBLIC HEALTHCARE SECTOR 1994-1997 AT CURRENT PRICES (£M)

TABLE 14: VALUE OF BUILDING WORK IN THE UK PRIVATE HEALTHCARE SECTOR 1994-1997 AT CURRENT PRICES (£M)

TABLE 15: TOTAL NUMBER OF PERSONNEL IN UK SERVICES 1990-1997 (THOUSANDS)

TABLE 16: CLUBS AND SOCIETIES IN THE UK 1997

CHART 17: FORECAST MIX OF SALES OF PREFABRICATED BUILDINGS TO MAJOR END USER SECTORS BY VALUE - 2001

CHART 18: MARKET SHARES OF THE MAJOR SUPPLIERS IN THE PREFABRICATED BUILDING MARKET 1997 - BY VALUE

TABLE 19: HOUSING COMPLETIONS 1990-1997 GREAT BRITAIN ('000)

TABLE 20: HOUSING STARTS 1993-1997 GREAT BRITAIN ('000)

TABLE 21: VALUE OF NEW UK HOUSING OUTPUT AND RMI OUTPUT (£M)

CHART 22: AGE DISTRIBUTION OF THE RESIDENT UK POPULATION 1996 ('000)

CHART 23: NUMBER OF EMPLOYEES IN EMPLOYMENT GB - JUNE 1981-97 (MILLIONS)

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

CHART 25: PDI & SAVINGS RATIO

CHART 26: MIX OF NUMBER OF PEOPLE PER HOUSEHOLD 1971 & 1995/6

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EXECUTIVE SUMMARY

The prefabricated buildings market is a relatively fragmented sector, with many end users with differing needs and requirements. Over the last few years, the market has experienced periods of sustained and often rapid growth in value as higher volumes of buildings have been purchased, with levels of specification increasing.

The total market in 1997 is estimated at £355 million at manufacturers selling prices, which represents strong growth of around 9 percent from the previous year. During the period of 1994-1997, the market experienced healthy rates of growth of around 27 percent overall. The majority of this growth was achieved during 1996 and 1997, with economic growth stimulating demand for greater volume and higher specification buildings. Over the next 3-4 years the market is forecast to continue to grow steadily at a rate of around 4 percent per annum, which represents a lower rate of growth as the economy slows down. Longer term forecasts from 2000 onwards are more positive, with predicted increases in the levels of business investment stimulating overall demand.

The market can be segmented by style of building and by end user type. The vast majority of prefabricated buildings are volumetric style, with a market share of around 75 percent by value, with post panel buildings taking a share of around 16 percent. Overall market trends within the construction industry are towards less on-site erection, which therefore reduces the need for skilled labour, eliminates delays caused by the weather and ensures higher quality output. Our forecasts are for a continuation of the dominance of volumetric style buildings for the above reasons.

The market for prefabricated buildings can also be segmented by end user sectors, which can be varied with vastly different requirements in terms of size, appearance etc. The majority of the end users of prefabricated buildings are within the commercial, hotel and catering, educational, residential, healthcare and portable cabin sectors. Forecasts for growth indicate greater development and market share gain within the commercial, hotel and catering, residential and educational sectors.

The market for prefabricated buildings has a significant impact on the markets for components, fixtures and fittings. Prefabricated buildings are generally 'complete' structures which includes doors, windows, sanitary facilities etc. The end user often dictates the level of specification and amount of furniture and furnishings which are supplied with the buildings. For example, portable cabins are generally very basic in terms of the doors, windows, decor, heating systems etc, which will be supplied as standard, whereas a hotel will contain higher specification, more aesthetically pleasing, components and factory fitted furniture.

The prefabricated building industry is a very fragmented market, with many suppliers all holding a relatively low market share. The overall market leader is the Shepherd Building Group, which has three subsidiaries Portakabin, Portasilo and Yorkon, with a collective share around 15 percent. Among the other prominent suppliers are the Elliott Group, Atlas Ward, Volumetric and SGB Rovacabin.

Perhaps the most important issue within the prefabricated buildings market is their growth within the residential sector. In the past, prefabricated buildings have been used for mainstream housing, however, they have often proved unpopular with residents and currently suffer from image problems. Prefabricated buildings are now on the verge of re-entering the mainstream housing market and offers major potential for the future. Equally, recent government expenditure announcements for significant increases in capital spending in education and health also offers the industry substantial potential in the medium term.

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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