M-&-E-Contractors_2015graphUK: The UK M&E contracting market grew 7% last year to around £16bn, according to a new report.

Growth in 2014 was said to have been driven by installations aimed at improving energy efficiency and reducing carbon emissions, but market values still remain some 13% below their 2008 peak, the AMA Research report Mechanical & Electrical Contractors Market Report – UK 2015-2019 Analysis reveals.

Following a decline in 2012, growth resumed in 2013 driven by improvements in office and leisure sectors in particular and private construction output in general, and this has continued into 2014 and 2015. However, the industry continues to face growing competition from other sectors such as FM, and M&E contractors are expected to diversify into wider service areas in order to build revenues, for example offering design and build capabilities or expanding to total management of hard FM projects.

Researchers expect the market to continue to grow to 2019, though at a more modest rate of around 3-4%. While non-domestic construction output is set to increase this year and remain positive through to 2019, government efforts to reduce public sector spending are continuing, and may lead to reduced opportunities within the public sector. However, areas where private funding is being channelled into public sector projects, should continue to offer good opportunities.

The report sees market conditions improving, with M&E contractors starting to experience the benefits of restructuring and streamlining exercises through improved margins. Consolidation amongst suppliers continues to be high within the market and this has led to a number of major players increasing in size, the report maintains. A growth in strategic acquisitions is seen as a  response to the growing focus on integrated services within the sector with contractors widening the range of services offered.

“The fact that businesses within both the public and private sectors urgently need to find cost savings has led to demand for more energy efficient heating, lighting and ventilation systems, both the simple extract types and the mechanical extract and heat recovery types,” said Keith Taylor, director of AMA Research. “This type of work will also be stimulated by legislation and guidelines around carbon reduction and renewable energy sources and as a result energy management will become an even more important area of focus for M&E contractors.”

The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.