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KN45023

KEY NOTE CONSTRUCTION INDUSTRY (UK) : MARCH 2003

Overview

Editor: Emily Pattullo
ISBN: 1-84168-463-5

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This report covers: construction, housebuilding, infrastructure, industrial construction, commercial construction, building materials, new work, repair and maintenance, housing starts, completions, building contractors, detached homes, flats, maisonettes, terraced houses, semi-detached houses, bungalows, water, sewerage, electricity utilities, gas, communications, air transport, railways, harbours, roads, factories, warehouses, oil installations, steel works, coal-mines, schools, colleges, universities, hospitals, offices, entertainment establishments, garages, shops, agriculture, sand, gravel, aggregates, bricks, concrete roofing tiles, clay roofing tiles, cement, ready-mixed concrete, concrete building blocks, sawmilling, planing, wood, veneer, plywood, laminates, carpentry, joinery

Companies covered include: Alfred McAlpine, AMEC, Balfour Beatty, Costain Group, Carillion, Tarmac, John Laing, John Mowlem & Company, Kier Group, Taylor Woodrow, Barratt Developments, Bellway, Berkeley Group, Bovis Homes, Bryant, George Wimpey, GallifordTry, Bovis Lend Lease, Aggregate Industries, Hanson, Ibstock Brick, Jeld-Wen, Lefarge Cement, Marshalls, Pilkington, Redland Roofing Systems, RMC Group, Tarmac,

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Executive Summary
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TABLE OF CONTENTS

Executive Summary 1

1. Industry Overview 13

REPORT COVERAGE 13

DEFINITIONS 13

Government Classifications 13

Building Completion Work 13

Civil Engineering 13

Construction and Repair of Buildings 13

General Construction and Repair of Buildings 14

Installation of Fixtures and Fittings 14

New Construction Work 14

Public and Private Sector 14

Types of Work and Materials 14

Infrastructure 14

Non-Housing Excluding Infrastructure 14

ECONOMIC TRENDS 15

Population 15

Table 1.1: UK Resident Population by Sex (000 and percent), Mid-Years 1998-2002 15

Table 1.2: Index of Growth in UK Gross Domestic Product at Current Prices (index 1995=100), 1997-2001 15

Table 1.3: The UK Inflation Rate ( percent), 1998-2002 16

Table 1.4: Unemployment Rate and Actual Number of Unemployed People ( percent and 000), 1998-2002 16

Table 1.5: Index of Household Disposable Income (index 1971=100), 1997-2000 17

MARKET SIZE 17

Table 1.6: Output of the UK Construction Industry by Sector by Value at Current Prices (£m and percent), 1998-2002 17

Table 1.7: The Total Construction Industry in Great Britain by Country by Contractors' Output by Value at Current Prices (£m and percent), 1998-2002 20

Table 1.8: Overseas Trade in Construction Services by Value (£m and percent), 1998-2002 21

MARKET SEGMENTATION 21

Housebuilding 21

Infrastructure 21

Industrial Construction 22

Commercial Construction 22

Building Materials 22

INDUSTRY STRUCTURE 22

Industry Synopsis 22

Table 1.9: UK Construction Industry Synopsis ( percent, days and £), 2002 23

Concentration 23

Number of UK Businesses 24

Table 1.10: Number of UK VAT-Based Enterprises Engaged in Construction, 2002 24

Employment 25

Table 1.11: The Total UK Construction Industry by Employment Status (000), 1998-2002 26

Table 1.12: Employment in the Construction Industry by Gender (000 and percent), 1998-2002 27

Distribution 27

MARKET POSITION 28

Europe 28

Table 1.13: The Construction Industry's Contribution to Gross Domestic Product Within the EU (Em), 1998-2002 29

Worldwide 29

KEY TRENDS 29

E-Commerce 29

International Markets 30

Political Influences 30

Consumer Demand 31

Health and Safety 31

Corporate Activity 32

The Environment 32

Sustainability 32

Skills Shortages 33

LEGISLATION 33

The Aggregates Levy 33

Control of Asbestos at Work Regulations 2002 34

The Building Amendment Regulations 2002 34

KEY TRADE ASSOCIATIONS 34

Building and Allied Trades Joint Industrial Council 35

Building Services Research and Information Association 35

Chartered Institute of Building 35

Construction Confederation 36

Construction Industry Council 36

Construction Products Association 37

Engineering Construction Industry Association 37

European Builders' Confederation 37

Federation of Master Builders 37

International Construction Group 38

National Federation of Builders 38

2. PEST Analysis 39

POLITICAL Factors 39

ECONOMIC factors 39

SOCIAL factors 40

TECHNOLOGICAL factors 41

3. Key Note Primary Research 42

INTRODUCTION 42

BUSINESS ACTIVITIES 42

INTERNATIONAL MARKETS 42

Current Business Climate in the Construction Industry 43

Business Prospects for 2003 43

CURRENT ISSUES 44

The Euro 44

E-Commerce 44

Legislation 45

Construction Skills 45

Other Comments 45

4. Competitive Structure 47

THE MARKETPLACE 47

MARKET LEADERS 47

Alfred McAlpine PLC 47

Company Structure 47

Financial Results 48

AMEC PLC 48

Company Structure 48

Financial Results 49

Balfour Beatty PLC 49

Company Structure 49

Financial Results 50

Carillion PLC 50

Company Structure 50

Financial Results 50

Costain Group PLC 51

Company Structure 51

Financial Results 51

John Laing PLC 51

Company Structure 51

Financial Results 52

Kier Group PLC 52

Company Structure 52

Financial Results 53

Mowlem PLC 53

Company Structure 53

Financial Results 54

Tarmac Ltd 54

Company Structure 54

Financial Results 54

Taylor Woodrow PLC 55

Company Structure 55

Financial Results 55

OUTSIDE SUPPLIERS 55

Land 56

Building Materials 56

Plant and Machinery 56

MARKETING ACTIVITY 57

Exhibitions and Trade Shows 57

5. Housebuilding 59

INTRODUCTION 59

DEFINITIONS 59

Dwelling 59

Flat 59

House 59

Private Enterprise 59

Registered Social Landlords 59

Local Authorities 60

Social and Affordable Housing 60

Stages of Construction 60

Housing Starts 60

Housing Completions 60

KEY TRENDS 60

Undersupply of Housing 60

Single Occupancy 61

Prefabrication and Innovation 61

Planning and Land Use 61

Design Trends 61

MARKET SIZE 62

Table 5.1: The Total UK Housebuilding Market by Output by Value at Current Prices (£m and percent), 1998-2002 62

Table 5.2: Number of Housing Starts and Completions in the UK (000 dwellings and percent), 1997/1998-2001/2002 63

SUPPLY STRUCTURE 64

Number of Companies and Employment 64

Distribution Structure 64

Key TRade Associations 64

House Builders' Federation 64

National House-Building Council 64

MAJOR PLAYERS 65

Barratt PLC 65

Bellway PLC 65

The Berkeley Group PLC 65

George Wimpey PLC 66

Persimmon PLC 66

Westbury PLC 66

Other Companies 67

Marketing Activity 67

BUYING BEHAVIOUR 67

Table 5.3: Penetration of Home Ownership and Rental by Sex, Age, Social Grade and Region ( percent of adults), 2002 68

Table 5.4: Profile of Home Ownership and Rental by Sex, Age, Social Grade and Region ( percent of adults), 2002 70

FORECASTS 2003 to 2007 71

Table 5.5: The Forecast Total UK Housebuilding Market by Output by Value at Current Prices (£m and percent), 2003-2007 71

Table 5.6: The Forecast Number of Housing Starts and Completions in the UK (number and percent), 2003-2007 72

6. Infrastructure 73

INTRODUCTION 73

DEFINITIONS 73

KEY TRENDS 74

Transport 74

Telecommunications 75

Utilities 75

MARKET SIZE 75

Table 6.1: Infrastructure Output New Work by Sector by Value at Current Prices (£m and percent), 1998-2002 76

SUPPLY STRUCTURE 76

Number of Companies and Employment 76

Distribution Structure 76

Key TRade Organisations 77

Chartered Institute of Building 77

Construction Confederation 77

Construction Industry Council 77

Engineering Construction Industry Association 78

The Institute of Civil Engineers 78

MAJOR PLAYERS 78

Alfred McAlpine PLC 78

AMEC PLC 79

Balfour Beatty PLC 79

Carillion PLC 79

Costain Group PLC 80

GallifordTry PLC 80

John Laing PLC 80

Kier Group PLC 80

Taylor Woodrow PLC 81

Promotional and Marketing Activity 81

BUYING BEHAVIOUR 81

Table 6.2: New Infrastructure Orders Obtained by Contractors by Value at Current Prices (£m and percent), 1998-2002 82

Table 6.3: New Infrastructure Orders Obtained by Contractors by Type of Work by Value at Current Prices (£m and percent), 1998-2002 83

FORECASTS 2003 to 2007 83

Table 6.4: Forecast Infrastructure Output New Work by Sector by Value at Current Prices (£m and percent), 2003-2007 84

7. Industrial Construction 85

INTRODUCTION 85

DEFINITIONS 85

KEY TRENDS 85

Manufacturing Downturn 85

MARKET SIZE 86

Table 7.1: Contractors' Output of Industrial Construction New Work by Value at Current Prices (£m and percent), 1998-2002 87

SUPPLY STRUCTURE 87

Number of Companies and Employment 87

Distribution Structure 88

Key TRade Associations 88

Chartered Institute of Building 88

Construction Confederation 88

Construction Industry Council 89

MAJOR PLAYERS 89

AMEC PLC 89

Costain Group PLC 89

GallifordTry PLC 89

Promotional and Marketing Activity 90

BUYING BEHAVIOUR 90

Table 7.2: New Orders Received by Contractors for Industrial Construction by Value at Current Prices (£m and percent), 1998-2002 90

FORECASTS 2003 to 2007 91

Table 7.3: Forecast Contractors' Output of Industrial Construction New Work by Value at Current Prices (£m and percent), 2003-2007 92

8. Commercial Construction 93

INTRODUCTION 93

DEFINITIONS 93

KEY TRENDS 94

MARKET SIZE 95

Table 8.1: Contractors' Output of Commercial/Non-Housing New Work by Value at Current Prices (£m and percent), 1998-2002 95

SUPPLY STRUCTURE 96

Number of Companies and Employment 96

Distribution Structure 97

Key TRade Associations 97

Chartered Institute of Building 97

The Construction Confederation 97

Construction Industry Council 98

MAJOR PLAYERS 98

AMEC PLC 98

Balfour Beatty PLC 98

Bovis Lend Lease 98

Carillion PLC 98

Costain Group PLC 99

GallifordTry PLC 99

Kier Group PLC 99

Mowlem PLC 99

Taylor Woodrow PLC 99

Promotional and Marketing Activity 100

BUYING BEHAVIOUR 100

Table 8.2: New Orders Received by Contractors for Commercial/Non-Housing Construction by Value at Current Prices (£m and percent), 1998-2002 100

FORECASTS 2003 to 2007 101

Table 8.3: Forecast Contractors' Output of Commercial/ Non-Housing New Work by Value at Current Prices (£m and percent), 2003-2007 102

9. Building Materials 103

INTRODUCTION 103

DEFINITIONS 103

KEY TRENDS 103

Product Innovation 103

E-Commerce 104

Environmental Legislation and Taxation 105

MARKET SIZE 105

Sand and Gravel 105

By Value 105

Table 9.1: The Apparent UK Sand and Gravel Market by Value (£000 and percent), 1998-2002 106

By Volume 106

Table 9.2: UK Production of Sand and Gravel by Volume (tonnes and percent), 1998-2002 107

Concrete Products for Construction 107

By Value 107

Table 9.3: The Apparent UK Concrete Products for Construction Market by Value (£000), 1998-2002 107

By Volume 108

Table 9.4: The Apparent UK Concrete Products for Construction Market by Volume (000 tonnes and percent), 1998-2002 108

Ready-Mixed Concrete 109

By Value 109

Table 9.5: The Apparent UK Ready-Mixed Concrete Market by Value (£000), 1998-2002 110

By Volume 110

Table 9.6: The Apparent UK Ready-Mixed Concrete Market by Volume (000 tonnes), 1998-2002 111

Cement 111

By Value 111

Table 9.7: The Apparent UK Cement Market by Value (£000 and percent), 1998-2002 112

By Volume 112

Table 9.8: The Apparent UK Cement and Clinker Market by Volume (000 tonnes and percent), 1998-2002 113

Wood-Based Panels 113

By Value 113

Table 9.9: UK Manufacturers' Sales and Imports of Wood-Based Panels by Value (£000 and percent), 1998-2002 113

By Volume 114

Table 9.10: Production of Wood-Based Panels by Volume in Great Britain (000 cubic metres and percent), 1998-2002 114

Brick 114

By Value 114

Table 9.11: The Apparent UK Brick Market by Value (£000 and percent), 1998-2002 115

By Volume 115

Table 9.12: The Apparent UK Brick Products Market by Volume (million and percent), 1998-2002 116

Table 9.13: The Apparent UK Brick Products Market by Volume (tonnes and percent), 1998-2002 117

Slate 117

By Value 117

Table 9.14: The Apparent UK Slate Market by Value (£000 and percent), 1998-2002 118

By Volume 118

Table 9.15: The Apparent UK Slate Market by Volume (tonnes and percent), 1998-2002 119

SUPPLY STRUCTURE 119

Number of Companies and Employment 119

Table 9.16: Number of VAT-Based Enterprises Engaged in the Manufacture of Building Materials, 2002 120

Key Trade Associations 121

Brick Development Association 121

British Aggregates Association 122

British Cement Association 122

British Precast Concrete Federation 122

Builders' Merchants Federation 122

Construction Products Association 122

Council of European Producers of Materials for Construction 123

The Glass and Glazing Federation 123

Gypsum Products Development Association 123

The Metal Cladding and Roofing Manufacturers' Association Ltd 123

Quarry Products Association 123

Timber Trade Federation 124

Distribution Structure 124

MAJOR PLAYERS 124

Aggregate Industries PLC 124

Hanson PLC 125

Ibstock Brick Ltd 126

Jeld-Wen UK Ltd 126

Lafarge Cement UK 126

Marshalls PLC 127

Pilkington PLC 127

Redland Roofing Systems Ltd 128

RMC Group PLC 128

Tarmac Group Ltd 129

Promotional and Marketing Activity 129

BUYING BEHAVIOUR 130

FORECASTS 2003 to 2007 130

Table 9.17: The Forecast Total UK Building Materials Market by Value at Current Prices (£000 and percent), 2003-2007 131

10. A Global Perspective 132

Major trends 132

Table 10.1: The Construction Industry's Contribution to Gross Domestic Product within the EU (Mm), 1998-2002 132

Consumer Behaviour 134

The Future 134

11. The Future 135

Table 11.1: Forecast Output of the UK Construction Industry by Value at Current Prices (£m and percent), 2003-2007 135

FUTURE TRENDS 136

Demographic Changes 136

Single-Person Households 136

Skills Shortage 136

Europeanisation/Globalisation 137

Product Development/Technological Changes 137

Competitor Forecasts 137

12. Further Sources 138

Associations 138

Publications 140

General Sources 140

Bonnier Information Sources 141

Government Publications 142

EXECUTIVE SUMMARY

Back to TopThe UK construction industry is made up of construction services and construction products manufacturing. In total, the construction industry accounts for almost 9 percent of the UK's gross domestic product (GDP) at market prices during 2001. Key Note estimates that the output of the construction industry alone was £81.9bn in 2002. Not only is the construction industry a major contributor to the UK economy, it is also a major employer and plays a critical role in the social and environmental development of the UK. Over recent years, the UK construction industry has experienced high levels of growth. Between 2001 and 2002, the output of the industry is estimated to have increased by 9.7 percent.

This review analyses the UK construction industry in terms of construction services and construction products, namely building materials. In addition to an overview of the entire construction industry, the review also provides detailed analyses of the industry's key sectors: housebuilding, infrastructure, industrial construction, commercial construction and building materials. The UK's construction industry has been enjoying a period of strong growth, with the infrastructure and the commercial construction sectors at the forefront of this growth trend.

A number of external factors have affected the development of the construction market. Some of these key influences include the increasing uptake of e-commerce solutions by construction companies, the ongoing political influence on the industry at both central and local government levels, new environmental legislation, the shortage of skilled construction workers and the worrying deterioration in the sector's health and safety record. Recent political and legal changes have perhaps been most significant. The Government has been encouraging a partnership approach between all of the main stakeholders that are involved in or affected by the work of the construction industry, in a drive to improve quality standards and innovation within the industry. A number of environmental laws have been introduced that have had a major impact on the construction industry. These have not only promoted greater environmental efficiency in terms of recycling, but have also encouraged product innovation in construction materials and advanced industry sustainability.

In addition to these key influences, the development of the housebuilding sector is currently being shaped by two key factors. The first of these is a restriction on the availability of new land suitable for residential building, and the second is a demographic shift towards people living on their own. The infrastructure sector is heavily influenced by government investment in the UK's transport infrastructure, while growth in industrial construction is being constricted as a result of the current economic downturn and the ongoing pressures on the UK's manufacturing sector. The commercial construction sector is also feeling the effects of the current global slowdown, but at the same time, it is benefiting from public-sector and Private Finance Initiative (PFI) investment in new schools and hospitals. Demand in the building materials sector is directly linked to the market conditions in the UK construction services sector. The building materials sector has been enjoying growth as a result of the buoyant market for UK construction services, but demand for products that are prefabricated or hi-tech in terms of environmental efficiency has been increasing more rapidly than demand for traditional building materials. The prospects for the UK construction industry are likely to be very favourable over the next few years. Growth in infrastructure and commercial construction is set to continue as the Government fulfils its election pledges to improve the transport, education and health sectors. The chronic under-supply of housing in the UK is likely to sustain demand for the housebuilding sector, even if structural problems relating to the supply of land and labour curtail demand

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