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M&E growth set to continue

A study by AMA research predicts continued research in the mechanical and electrical (M&E) sector over the next four years.

With an estimated value of around £16bn in 2014, the Mechanical and Electrical Contractors Market Report – UK 2015-2019 Analysis showed growth of around 7% compared with the previous year.

Energy efficiency and carbon emissions reduction installations had been a significant factor in this, driven by legislation and regulations, plus long-term cost savings further emphasised by increasing fuel costs.

It found that the market remained some 13% below its 2008 peak, despite growth over the past two years driven by improvements in office and leisure sectors in particular and private construction output in general.

However, it also highlighted growing competition from sectors such as FM, and said M&E contractors were expected to diversify into wider service areas such as offering design and build capabilities or expanding to total management of hard FM projects.

As market conditions improve, the survey found that M&E contractors are starting to experience the benefits of restructuring and streamlining exercises through improved margins.

Consolidation activity among suppliers continued to be high within the market and this has led to a number of major players increasing in size.

The growth in strategic acquisitions is also in response to the focus on integrated services within the sector, with contractors widening the range of services offered.

Current forecasts for the market indicate that it will continue to increase at a rate of around 3%-4% until the end of the forecast period.

Non-domestic construction output is set to increase during 2015 and remain positive through to 2019, though the government’s efforts to reduce public-sector spending are continuing and may lead to reduced opportunities.

Areas such as education, where private funding is being channelled into public-sector projects, should, however, continue to offer good opportunities.