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KN29020 KEY NOTE PROCESS PLANT DECEMBER 2000

ISBN 1-85765-783-7

This report covers: chemicals industry, nuclear fuel processing, gas production, petroleum refining, gas supply, electricity generation, steel industry, water and sewerage, food and drink industry, process plant, aerators, boilers, bulk handling equipment, centrifuges, chemical treatment plant, columns, towers, compressors, control equipment, dryers, evaporators, fermenters, filtration equipment, furnaces, heat exchangers, instrumentation, mixers, nuclear plant, pipework, pressure vessels, pumps, rolling mills, separators, tanks, vessels, valves, reliability of PC based equipment, use of Fieldbus, Magnox, Blake Oil Field, Jade Oil Field, Keith Oil Field, renewable energy, combined heat and power, CHP,

Companies covered include: Innogy, AMEC, Bechtel, Brunel Holdings, Edmund Nuttall, Fluor, Foster Wheeler, Invensys, Jacobs Engineering, Kvaerner, Motherwell Bridge, MW Kellogg, Simon-Carves, Spirax-Sarco, Stone and Webster Engineering, The Weir Group, Allott & Lomax, AEA Technology, Babtie Group, British Energy Generation, British Nuclear Fuels, BNFL, NIS, NNC, Nukem Nuclear, Urenco,

Table of Contents
Executive Summary
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TABLE OF CONTENTS

Executive Summary	1
THE TOTAL MARKET	1
Chemicals Industry	1
Nuclear Fuel Processing Industry	2
Oil and Gas Production Industry	2
Petroleum Refining Industry	2
Gas Supply Industry	2
Electricity Generation
Industry	3
Steel Industry	3
Water and Sewerage Industry	3
Food and Drink Industry	3
FUTURE PROSPECTS	4
FORECASTS 2001 TO 2005	4
1. Market Overview	5
INTRODUCTION	5
DEFINITION	5
Table 1.1: Definitive Items of Process Plant	6
INDUSTRY STRUCTURE	8
Industry Concentration	8
Table 1.2: Number of VAT-Based Enterprises Engaged in the Manufacture of
Metal Products, Machinery and Equipment by Turnover Size (£000), 2000	8
Distribution	9
Employment	11
Table 1.3: Number of Local Units Engaged in the Manufacture of Metal Products, Machinery and Equipment by Employment Size (number of employees), 2000	11
Trade Associations	12
British Constructional Steelwork Association Ltd	12
British Chemical Engineering Contractors Association	12
British Nuclear
Industry Forum	13
Chemical Industries
Association	13
Electricity Association	14
Federation of British Electrotechnical and Allied Manufacturers’ Associations	15
UK Steel Association	16
Other Associations	16
Association of British Offshore Industries	16
Combined Heat and Power Association	17
Engineering Construction Industry Association	17
GAMBICA Association Ltd	18
Power Generation Contractors Association	18
Solids Handling and Processing Association	19
MARKET SIZE	19
Determination of Market Size	19
Total Capital Expenditure	19
Table 1.4: Total UK Capital Expenditure by the Process Industries at Constant 1995 Prices, (£m and percent),
1996-2000	20
Expenditure on Process Plant	20
Table 1.5: Total UK Expenditure on Process Plant at Constant 1995 Prices (£m and percent),
1996-2000	20
By Market Sector	21
Total Capital Expenditure	21
Table 1.6: Total UK Capital Expenditure by the Process Industries by Sector
at Constant 1995 Prices (£m), 1996-2000	21
Expenditure on
Process Plant	21
Table 1.7: Sector Share of Total UK Capital Expenditure by the Process Plant Industries ( percent),
1996-2000	22
Table 1.8: Total UK Expenditure on Process Plant by Sector by Value
at Constant 1995 Prices (£m), 1996-2000	22
Table 1.9: Sector Share of Total UK Expenditure on Process Plant ( percent),
1996-2000	23
Sector Analysis of Proportional Spend on Process Plant	24
Table 1.10: Proportion of Total Capital Expenditure Invested in Process Plant
by Sector ( percent), 1996-2000	25
KEY TRENDS AND PROSPECTS	26
Project Timescales and Order Backlog	26
Global Economic Influences	26
PEST ANALYSIS	28
Political Factors	28
Table 1.11: Capacity of Innogy’s Generators (megawatts)	28
Economic Factors	30
Social Factors	31
Technological Factors	32
A GLOBAL PERSPECTIVE	33
International Trade	33
Imports	33
Table 1.12: Imports of Process Plant Equipment (£000), January-July 2000	34
Exports	35
Table 1.13: Exports of Process Plant Equipment (£000), January-July 2000	35
Balance of Trade	36
Table 1.14: Balance of Trade with EU Countries for Process Plant Equipment
(£000), January-July 2000	36
Table 1.15: Balance of Trade with Non-EU Countries for Process Plant Equipment
(£000), January-July 2000	37
Leading World Markets	38
Imports by Country of Origin	38
Table 1.16: Sources of Imported Process Plant (£m and percent), 1996 and 2000	38
Exports by Destination
Country	39
Table 1.17: Exported Process Plant by Country of Destination (£m and percent), 1996 and 2000	40
2. Key Note
Field Research	43
INTRODUCTION	43
BUYING PROCESS	43
TELEPHONE SURVEY	44
Reliability of PC-Based Equipment	44
Use of Fieldbus	46
3. Competitor Analysis	49
LEADING PROCESS PLANT MANUFACTURERS	49
Table 3.1: Selected Leading Process Plant Contractors by Turnover (£m), 1998/1999/2000	49
Table 3.2: Selected Leading Process Plant Equipment Manufacturers
(£m), 1998/1999/2000	51
AMEC PLC	52
Financial Results	52
Bechtel Ltd	53
Financial Results	54
Brunel Holdings PLC	54
Financial Results	55
Edmund Nuttall Ltd	55
Financial Results	55
Fluor Ltd	55
Financial Results	56
Foster Wheeler Ltd	56
Financial Results	56
Invensys PLC	57
Financial Results	59
Jacobs Engineering UK Ltd	59
Financial Results	60
Kvaerner PLC	60
Financial Results	61
Motherwell Bridge
Holdings Ltd	62
Financial Results	62
MW Kellogg Ltd	62
Financial Results	62
Simon-Carves UK	63
Financial Results	63
Spirax-Sarco Ltd	63
Financial Results	63
Stone and Webster
Engineering Ltd	64
Financial Results	64
The Weir Group PLC	65
Financial Results	65
CONTROL SYSTEMS COMPANIES	65
ADVERTISING AND PROMOTION	67
4. Chemicals Industry	69
DEFINITION	69
KEY TRENDS	69
KEY ISSUES	70
Decline in Agrochemicals Markets	70
Global Overproduction and Raw Material Prices	70
Environmental Measures	70
Energy Tax	72
MARKET SIZE	72
Overall Chemicals Market	72
Table 4.1: The Apparent UK Chemicals Market by Value (£m), 1995-1999	73
Table 4.2: Manufacturers’ Sales by Sector by Value ( percent), 1999	73
Process Plant Market	74
Table 4.3: Total UK Expenditure by the Chemical Industry at Constant 1995 Prices (£m and percent),
1996-2000	75
Table 4.4: Total Manufacturing and Chemical Industry Investment
at Current Prices (£m and percent), 1995-1999	75
MARKET STRUCTURE	76
Table 4.5: Number of VAT-Based Chemical Enterprises in the UK by Turnover Size
(£000), 2000	76
MAJOR PLAYERS	78
Recent Developments	79
Chemical Industry	79
Pharmaceuticals Industry	80
Advertising and Promotion	80
Chemical Plant	80
Pharmaceutical Plant	80
BUYING BEHAVIOUR	81
Table 4.6: Distribution of Forecast Investment in the Chemical Industry by Region ( percent), 1997/1999 and 1998/2000	81
Table 4.7: UK Demand for Chemicals — Market Shares of Direct Purchases ( percent),
1997	82
Table 4.8: Total Capital Expenditure by the Chemical Industry at Constant 1995 Prices (£m and percent), 1994/1996-1998/2000	83
FORECASTS 2001 TO 2005	83
Table 4.9: Forecast Total UK Expenditure on Process Plant by the Chemical Industry at Constant 1995 Prices, (£m and percent), 2001-2005	84
5. Nuclear Fuel Processing Industry	85
DEFINITION	85
KEY TRENDS	85
KEY ISSUES	86
MARKET SIZE	86
Table 5.1: Total UK Expenditure by the Nuclear Fuel Processing Industry
at Constant 1995 Prices (£m and percent), 1996-2000	88
MARKET STRUCTURE	88
Table 5.2: Member Companies of the British Nuclear Industry Forum,
30th November 2000	88
MAJOR PLAYERS	89
AEA Technology PLC	89
Allott & Lomax	90
Babtie Group Ltd	90
British Energy Generation (UK) Ltd	90
British Nuclear Fuels PLC	91
NIS Ltd	91
NNC Ltd	91
Nukem Nuclear Ltd	92
Urenco Ltd	92
BUYING BEHAVIOUR	92
FORECASTS 2001 TO 2005	93
Table 5.3: Forecast Total UK Expenditure on Process Plant by the Nuclear Fuel
Processing Industry at Constant 1995 Prices (£m and percent), 2001-2005	93
6. Oil and Gas Production Industry	95
DEFINITION	95
KEY TRENDS	95
Blake Oil Field	95
Jade Oil Field	96
Keith Oil Field	96
KEY ISSUES	97
High Development and Production Costs in the UK	97
Prices for Crude Oil	97
Taxation	97
MARKET SIZE	98
Table 6.1: Company Activity in Major Oil Fields by Volume Output
(million tonnes), 1998	98
Table 6.2: Total UK Expenditure by the Oil and Gas Production Industry
at Constant 1995 Prices (£m and percent), 1996-2000	100
Table 6.3: Breakdown of Capital Expenditure by the UK Oil and Gas
Production Industry by Sector by Value ( percent),
1996-2000	101
MARKET STRUCTURE	101
Table 6.4: Employment in the Oil and Gas Industry by Region (000 and percent), 1997	101
Table 6.5: Membership of the Association of British Offshore Industries,
2000	102
MAJOR PLAYERS	103
Recent Developments	104
FORECASTS 2001 TO 2005	104
Table 6.6: Forecast Total UK Expenditure on Process Plant by the Oil and Gas
Production Industry at Constant 1995 Prices (£m and percent), 2001-2005	105
7. Petroleum Refining Industry	107
DEFINITION	107
KEY TRENDS	107
KEY ISSUES	107
MARKET SIZE	108
Table 7.1: Oil Refining in the UK (000 of barrels per day), 1998	108
Table 7.2: Distillation Capacity of UK Refineries by Volume (million tonnes oil equivalent), 1998	109
Table 7.3: Total UK Expenditure by the Petroleum Refining Industry
at Constant 1995 Prices (£m and percent), 1996-2000	110
MARKET STRUCTURE	111
Recent Developments	111
FORECASTS 2001 TO 2005	112
Table 7.4: Forecast Total UK Expenditure on Process Plant by the Petroleum
Refining Industry at Constant 1995 Prices (£m and percent), 2001-2005	112
8. Gas Supply Industry	113
DEFINITION	113
KEY TRENDS	113
Table 8.1: UK Inland Consumption of Primary Fuels by Type by Volume
(million tonnes oil equivalent), 1995-1999	113
Table 8.2: Fuel Used in UK Electricity Generation by Type by Volume (million tonnes oil equivalent),
1995-1999	114
KEY ISSUES	114
Climate Change Levy	114
Gas to Liquids Plant	114
MARKET SIZE	115
Table 8.3: Natural Gas Consumption in the UK (billion cubic feet), 1998	115
Table 8.4: Total UK Expenditure by the Gas Supply Industry at Constant 1995 Prices (£m and percent), 1996-2000	116
MARKET STRUCTURE	116
Table 8.5: UK Supply of and Demand for Natural Gas and Colliery Methane (gigawatt hours), 1997-1999	117
Table 8.6: UK Imports and Exports of Natural Gas (gigawatt hours),
1995-1999	118
MAJOR PLAYERS	118
Recent Developments	119
BUYING BEHAVIOUR	120
Table 8.7: UK Gas Sales by End-User Sector (£m and percent), 1997-1999	120
Table 8.8: Analysis of UK Natural Gas and Colliery Methane Demand by Sector
(gigawatt hours and percent), 1997-1999	121
FORECASTS 2001 TO 2005	122
Table 8.9: Forecast Total UK Expenditure on Process Plant by the Gas Supply
Industry at Constant 1995 Prices (£m and percent),
2001-2005	122
9. Electricity Generation Industry	123
DEFINITION	123
Combined Heat and Power	123
KEY TRENDS	123
Table 9.1: Fuel Shares for Electricity Generation in England and Wales
( percent and terawatt hours), 1970-1997	124
Table 9.2: Fuel Shares for Electricity Generation in Scotland ( percent and terawatt hours), 1970-1997	125
KEY ISSUES	125
Continued Move to Gas-Powered Generation	125
Table 9.3: Forecast Electricity Generation Based on Low Energy Prices
by Fuel Type (terawatt hours and percent), 2000-2020	126
Table 9.4: Forecast Electricity Generation Based on High Energy Prices
by Fuel Type (terawatt hours and percent), 2000-2020	127
Encouragement of Renewable Energy	127
MARKET SIZE	128
Table 9.5: Members of the Electricity Association,
1999	128
Table 9.6: Combined Heat and Power Installations in the UK (number and MWe capacity), 1993-1997	129
Table 9.7: Total Expenditure by the Electricity Generation Industry at Constant 1995 Prices (£m and percent),
1996-2000	130
MARKET STRUCTURE	130
Table 9.8: Electricity Generation and Capacity (billion kilowatt hours,
million kilowatts and percent), 1998	130
Table 9.9: Renewable Energy Generation by Source
(number of projects, megawatts and percent), June 1998	131
MAJOR PLAYERS	133
Recent Developments	133
Advertising and Promotion	134
BUYING BEHAVIOUR	134
Combined Heat and Power Installations	134
Table 9.10: Combined Heat and Power Installations by Electrical Capacity
(number, percent, KWe and MWe), 1999	135
Table 9.11: Combined Heat and Power Installations by Sector (number of installations, percent, MWe and MWth), Year End 1999	136
FORECASTS 2001 TO 2005	137
Table 9.12: Forecast Total UK Expenditure on Process Plant by the Electricity
Generation Industry at Constant 1995 Prices (£m and percent), 2001-2005	137
10. Steel Industry	139
DEFINITION	139
KEY TRENDS	139
KEY ISSUES	140
End of Life Vehicles Directive/Leaded Steels	140
Climate Change Levy	140
Trade	141
MARKET SIZE	141
Table 10.1: Total UK Expenditure by the Steel Industry at Constant 1995 Prices (£m and percent),
1996-2000	142
MAJOR PLAYERS	142
Recent Developments	143
FORECASTS 2001 TO 2005	143
Table 10.2: Forecast Total UK Expenditure on Process Plant by the Steel Industry
at Constant 1995 Prices (£m and percent), 2001-2005	144
11. Water and Sewerage Industry	145
DEFINITION	145
KEY TRENDS	145
KEY ISSUES	146
Table 11.1: Maintenance Activity on Underground Assets (kilometres and number), 1995/1996-1999/2000	146
MARKET SIZE	147
Table 11.2: Total UK Expenditure by the Water and Sewerage Industry
at Constant 1995 Prices (£m and percent), 1996-2000	147
Table 11.3: Gross Capital Expenditure by Individual Water and Sewerage Service
Companies by Type of Service (£m at 1999-2000 prices), 1995/1996-
1999/2000	148
Table 11.4: Gross Capital Expenditure by Type of Service at Constant 1999 Prices (£m at 1999-2000 prices), 1995-1996-
1999/2000	149
MAJOR PLAYERS	149
Recent Developments	150
BUYING BEHAVIOUR	151
Table 11.5: Gross Capital Investment by Water Services Companies (£m), 1999/2000	151
Table 11.6: Gross Capital Investment by Sewerage Services Companies
(£m), 1999/2000	153
FORECASTS 2001 TO 2005	153
Table 11.7: Forecast Total UK Expenditure on Process Plant by the Water and
Sewerage Industry at Constant 1995 Prices (£m and percent), 2001-2005	154
12. Food and Drink Industry	155
DEFINITION	155
KEY TRENDS	155
Table 12.1: Per Capita Household Consumption of Selected Drinks (kilograms or litres per capita),
1980-2000	156
KEY ISSUES	156
Healthy Eating Trends	156
Table 12.2: Consumer Expenditure on Food by Sector at Current Prices
( percent), 1994-1999	157
Consumption of
Ready Meals	157
Table 12.3: Consumer Expenditure on Ready Meals at Current Prices (£m at rsp and percent), 1994-1999	157
MARKET SIZE	158
Table 12.4: Number of VAT-Based Enterprises Engaged in the Manufacture of
Food and Drink, 2000	159
Table 12.5: Total Expenditure by the Food and Drink Industry at Constant 1995 Prices (£m and percent), 1996-2000	160
Table 12.6: Expenditure on Process Plant by the Food and Drink Industry
by Sector ( percent), 1994-1998	161
MAJOR PLAYERS	162
Food Manufacturers	162
Drinks Companies	162
Advertising and Promotion	163
Recent Developments	163
FORECASTS 2001 TO 2005	165
Table 12.7: Forecast Total UK Expenditure on Process Plant by the Food and Drink Industry at Constant 1995 Prices (£m and percent),
2001-2005	165
13. Strengths, Weaknesses, Opportunities and Threats	167
STRENGTHS	167
WEAKNESSES	167
OPPORTUNITIES	168
THREATS	168
14. The Future	169
FORECASTS 2001 TO 2005	169
Table 14.1: Forecast Total UK Expenditure on Process Plant by Sector at Constant 1995 Prices (£m and percent), 2001-2005	169
Chemicals Industry	170
Nuclear Fuel Processing Industry	170
Oil and Gas Production Industry	170
Petroleum Refining Industry	170
Gas Supply Industry	170
Electricity
Generation Industry	171
Steel Industry	171
Water and
Sewerage Industry	171
Food and Drink Industry	171
15. Further Sources	173
Associations	173
Periodicals	175
Directories	176
General Sources	176
Bonnier Information Sources	177
Government Publications	179
Other Sources	179
Key Note Research	181
The Key Note Range of Reports	183

EXECUTIVE SUMMARY

THE TOTAL MARKET

The UK expenditure on process plant equipment in 2000 is estimated by Key Note to be £5.13bn, out of a total capital expenditure (including construction works) of £13.51bn. The expenditure on process plant in the UK fell strongly in 2000, which can be partially attributed to uncertainty about interest rates and partly to the strength of sterling affecting export sales for end-users.

The process plant industry examined by this report includes the manufacturers of equipment, ranging from the larger items of plant (such as distillation columns, evaporators, pressure vessels and dryers); to smaller items (such as pipework components, pumps, filters and valves); to control gear items (such as sensors, instrumentation and control computers). This Review also examines the role played by the process plant contractors and project management teams, and analyses their turnover. The main end users for process plant include chemicals, pharmaceuticals and biotechnology product manufacturers; oil and gas producers; petroleum product refiners; electricity generators; iron and steel producers; water and sewage treatment plants; and food and drinks producers.

The report studies the main markets for process plant and describes the key trends and issues faced by these markets. It also studies the market size for each sector and examines corporate behaviour in the last year by the major purchasers of process plant.

Chemicals Industry

The chemicals industry is the second most important sector for the process plant industry, having an estimated 20.4 percent market share of all process plant sales in 2000. In terms of total capital expenditure on processing, it has a lower position of fourth place, but still has a market share of 15.4 percent. The chemicals industry has been affected by declining sales and adverse reactions in the agrochemicals sector. There is also global over-capacity in several subsectors of the chemicals industry, which is expected to lead to short term falls in capital expenditure.

Nuclear Fuel Processing Industry

Expenditure on process plant for the nuclear fuel reprocessing industry has never been a high percentage of total sales and fell further in 2000, to an estimated 1.9 percent of total process plant purchases. However, if consultancy work on the decommissioning of nuclear power plants and on waste disposal is included, the prospects for the sector look encouraging. The outlook for the nuclear industry is one of gradual decline due to a total absence of plans to build new stations, but feasible alternative power sources for the 13 Gigawatt capacity of the existing stations would lead to a large increase in greenhouse gases. Further debate on the replacement for nuclear might lead to extended life for these stations.

Oil and Gas Production Industry

Oil and gas production fell from first position in importance for the process plant industry in 2000, but still has an estimated market share of 26.6 percent of total capital expenditure in the year. In terms of process plant purchases alone, its position is lower, with an estimated 17.6 percent of purchases of process plant in 2000 relating to oil and gas production. The buoyancy of oil prices and concerns about consumption levels have led to muted investment in this area. The high development costs in the UK have also delayed investment decisions, but the need to maintain the existing infrastructure has led to an increase in exploration in 2000. The strong rise in gas consumption has also spurred capital investment in this sector.

Petroleum Refining Industry

In terms of proportion of total capital expenditure spent on process plant and equipment, the petroleum refining sector is the most important industry for the process plant manufacturers, with over 98 percent of capital expenditure relating to process plant purchases. However, the petroleum refining industry only accounts for a relatively small proportion of total sales, with an estimated share of 5.4 percent for 2000. The petroleum refining sector has over-capacity in the UK, which has led to a downturn in investment in this sector, and this is expected to continue in the near future.

Gas Supply Industry

The gas supply industry is a low volume user of process plant and ranks near the bottom of the market share league, with an estimated proportion of 1.2 percent of total process plant purchases in 2000. The gas industry has seen strong growth in the past few years, with gas power stations taking over from coal-fired power plants. The trend is expected to continue, especially with the sharp rise in the use of combined heat and power generation plants.

Electricity Generation Industry

Purchases of process plant by the electricity generation sector have fallen in recent years, but in 2000 the expenditure on plant has increased, with the total share of the market rising to an estimated 2.9 percent for process plant and 4.4 percent for total capital expenditure. The key trend has been the shift away from coal to gas as the primary energy source for electricity generation. The share taken by gas is expected to increase further as new privately owned power stations come on stream. The Government’s Climate Change Levy is the major issue in this industry at present.

Steel Industry

The steel industry has the smallest proportion of purchases of process plant, with a share estimated to be just 0.8 percent in 2000. The steel sector has been affected very badly by falling steel prices, rising energy costs and steel dumping onto EU markets by Indian and Asian producers. The industry is very concerned about the effect the Climate Change Levy will have on its competitiveness with other steel producers. Steel consumption is not expected to grow strongly in the short term and this is having a severe dampening effect on investment decisions.

Water and Sewerage Industry

The water and sewerage industry sector is one of the top four sectors, with an estimated 14.7 percent of all process plant sales being destined for this industry in 2000. The industry has large civil engineering expenditure in conjunction with process plant purchases, making it the most important sector for overall capital expenditure on process plant and equipment, at 29.1 percent in 2000. The water industry’s investment programme has been governed to a large extent by the need to comply with EU drinking water quality directives. The first tranche of investment work is now complete and the industry is currently deciding new investment programmes with the water regulator. Strong investment is expected in the near future.

Food and Drink Industry

The food and drink industry, despite having a quiet period for purchasing new plant in recent times, remains the single most important sector in terms of the proportion of total purchases of process plant. Key Note estimates that in 2000, this sector was responsible for 35.2 percent of all process plant sales and 16.7 percent of all expenditure on process plant related capital expenditure. The food industry is another sector currently suffering from over-capacity. It is also under strong pressure from the powerful retailers to reduce prices. Recent health issues relating to food have not helped industry sales for some products.

FUTURE PROSPECTS

The process plant industry has been affected by the recession, although the reduction in spending has come later for the industry than for other sectors that have a shorter lead time for product procurement. The recovery from the recession is also later for the process plant industry, as new projects have a lengthy design period before orders are placed on manufacturers. Competition for overseas orders is intense due to the weakness of the European and American markets of the major process contractors. The Association of South East Asian Nations (ASEAN) financial crash and the devaluation of the Brazilian Real have also adversely affected the market.

The Year 2000 scare diverted considerable sums from capital expenditure in many firms. Complete audits of every single electronic item in factories were carried out, but few items were replaced prior to the year end. International markets have been weak and suppliers have had to sacrifice margins in order to make up for the strength of sterling. Industries such as petroleum refining, chemicals production, food and electricity generation have, in general terms, suffered from over-capacity both in the UK and from the European competitors. Electricity generation has seen an increase in combined heat and power plants for private users and some welcome investment in windfarms.

The controls sector is an important part of the process plant market, though it could be thought of as an outside supplier of electrical equipment. This sector has been suffering from lack of growth in the past 3 years, which has led to considerable corporate activity, with large numbers of mergers in an environment of profit warnings and stock slides. Currently, Invensys in the UK has a high profile due to a sudden fall in share price. It would appear that the stock market is not in favour of automation firms at the moment and is likely to lead to further falls in stock value for automation and instrumentation firms.

FORECASTS 2001 TO 2005

The total UK expenditure on process plant is forecast to be £5.27bn in 2005. This reflects on the static expectations for the total market over the next few years, although some sectors, such as the electricity generation, are expected to perform well due to increased market demand. After a long period of low investment, the oil and gas exploration sector has announced large expansion plans for the North Sea.

To some extent, the low investment in process plant and automation has been caused by a move to production by low wage economies rather than the installation of modern machinery to reduce labour costs in the UK and European factories.

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Last updated by Paul Tucker 2nd february 2001