UK process plant spend to increase 14% to 2015
10 Mar 2011
Manchester, UK – Overall, process plant expenditure is set to increase by 14% in real terms between 2009/10 and 2014/15, according to MBD Commercial Due Diligence.
In its latest UK Process Plant Market Development report, MBD forecasts total UK investment in process plant investment to increase during much of the five-year forecast period, except for a marginal decline during 2012/13.
The assessment suggests a return to form for the sector compared to 2009/10, when total expenditure increased by just 1% to £7738 million, and the 8% decline recorded in deep recessionary 2008/09. Prior to that, growth was recorded in each year between 2005/06 and 2007/08, culminating in an increase of 12% in nominal terms.
On a sectoral basis, MBD expects the chemicals industry to remain the largest area for process plant expenditure, accounting for between 25% and 26% of total investment throughout the forecast period.
In 2014/15, process plant spending is expected to reach £2335 million, representing overall growth of 14% in real terms compared with 2009/10. Process plant investment accounts for a major proportion of total capital expenditure, representing 92 -95%.
Much of the spending on process plant is generally on the basis of requirement, legislation and production efficiency, MBD noting that the UK chemical industry is already a well regulated industry.
“The majority of capital investment in the sector is allocated towards R&D, with companies expected to return to stronger R&D spending over the coming years, following spending cuts during the economic downturn,” MBD’s report added.
The electricity generating industry, however, is projected to demonstrate the strongest growth: increase by 88% between 2009/10 and 2014/15 – reflecting strong investment in new electricity generation plants, in particular new renewable energy sources.
Food & drink industry investment is likely to fluctuate somewhat during the five-year period, with an overall growth trend expected. In 2014/15, process plant spending is forecast to reach £2032 million. This is equivalent to an overall, increase of 9% in real terms compared with 2009/10.
Over the coming years, the main focus of the food & drink (including tobacco) industry’s capital expenditure is likely to be in new product development, packaging and associated process changes and productivity improvements.
Process plant expenditure in the water & sewerage industry should will increase by a strong 11% and 12% in 2010/11 and 2011/12 respectively, reflecting the start of the new price control period, MBD forecast.
This is anticipated to be followed by a decline of 2% in 2013/14 and of 7% in 2013/14. Overall, process plant expenditure by the water and sewerage industry is forecast to increase by 18% in real terms between 2009/10 and 2014/15.
Capital funding during the five-year forecast period will be centred on improving the industry assets to maintain the supply and demand balance but also to enhance operation and performance. The WFD is also expected to have an effect on process plant expenditure over the next few years
