A new report from AMA Research says that the market for mechanical and electrical (M&E) contracting was estimated to be valued at around £16bn in 2014, following strong growth of around 7% during the year.

A key area of growth has been installations aimed at improving energy efficiency and reducing carbon emissions, driven by increasingly stringent legislation and regulations, but also given impetus by the long-term cost savings that can be made by installing such systems, driven by underlying, increasing fuel costs.

However, market values remain some 13% below their 2008 peak. 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. 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.

As market conditions improve, M&E contractors are starting to experience the benefits of restructuring and streamlining exercises through improved margins. Consolidation activity amongst suppliers continues 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 growing focus on integrated services within the sector with contractors widening the range of services offered.

Current forecasts for the M&E contractors market indicate that it will continue to increase, though at a more modest rate of around 3-4%, until the end of the forecast period.

The Mechanical & Electrical Contractors Market Report – UK 2015-2019 Analysis report is published by AMA Research and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.