THE UK foundations industry is expected to record 2001 as its best year for more than decade, with projected annual growth of 13%.
Projections estimate the value of the UK foundation market in 2001 at £449M, a growth of 45% over the last five years. This outperforms overall construction output, which is expected to increase by 24%.
Growth is set to continue, with market value projected to increase by 26% between 2002 and 2006 to a value of £634M. The most significant increases are expected in the piling and underpinning sectors, rising by 31% and 25% respectively.
Specialist Foundations: UK , the latest report from analyst MSI Marketing Research for Industry, analyses the sector from 1997 to 2000, with annual market forecasts up to 2006.
MSI says growth is directly linked to the buoyant construction industry and a strong economic climate, with low interest rates, high levels of consumer confidence and falling unemployment encouraging increased public and private spending.
Investment has risen in infrastructure (particularly rail), urban regeneration and housing, which has had a big impact on the foundations sector.
A large number of high value, prestigious and long time-scale contracts have been let over the review period. This has eased the long term problem of overcapacity in the industry.
These projects include the Channel Tunnel Rail Link, development of Canary Wharf, Birmingham Northern Relief Road and urban regeneration projects. Larger contractors are reported to be concentrating on the bigger contracts, allowing small and medium size contractors to take a greater proportion of lower value contracts.
Growth has also allowed contractors to improve their profitability, eased pressure for price cutting and increased investment in research and development to improve efficiency.
But MSI believes overcapacity is likely to remain, which could lead to takeovers. Many foundation contractors are already owned by larger construction groups, providing them with financial stability and in-house work.
Smaller independent contractors may have to seek outside buyers. Many of these firms specialise in one area, making them an attractive acquisition for larger companies wanting to diversify into new areas, particularly if the firm is a recognised expert in its field.
Piling retained the lion's share of the market, 66%, in 2001. The ground improvement market is estimated to account for 22%, while the remaining 12% is represented by underpinning.
The piling sector has grown significantly over the past five years and is projected to rise by 21% in 2001 to reach £294M. Bored piling still accounts for a large proportion of the market but declined from 65% in 1997 to a projected 59% in 2001, with embedded retaining walls growing from 14% to a projected 24%.
The last figure is believed to be mainly due to the large number of walls on the CTRL.
The driven piling market continues to decline, from 21% in 1997 to an expected level of 17% in 2001.
Ground improvement is expected to be worth £100M in 2001, with increased track renewals driving demand. Vibration techniques account for an estimated 51%, followed by grouting (34%), dynamic compaction (9%) and ground freezing (6%).
The cyclic nature of the underpinning market is reflected in the report, as the dry summers of the mid-1990s were followed by wet summers and flooding, leading to a fall in value from £71M in 1997 to an expected £55M in 2001.
lSpecialist Foundations: UK is available from MSI Marketing Research for Industry, £475. Tel:
0800 195 6756; email: enquiries@ msi-marketingresearch. co. uk