We operate within the fluid power market, worth over £1 billion in the UK, £11 billion across Europe and £27.6 billion globally.
Fluid power technology is utilised in nearly every product developed and manufactured, across all industrial sectors. By definition fluid power uses fluid, either hydraulic liquid (mainly oil or water) or pneumatic gas (normally compressed air) under pressure to generate, control and transmit power. Key industry sectors include: automotive, construction and infrastructure, food processing and packaging, medical, oil and gas, agriculture and transportation services. Of the total UK fluid power revenue, hydraulics represents approximately 70%, pneumatics 20% and the remaining 10% in industrial products which act as conduits for gases and liquids. In the UK, we estimate Flowtech Fluidpower now holds around 10% market share across all categories.
Our competitive edge in the marketplace
The competitive landscape across fluid power is historically highly fragmented with several large organisations supplying a wide selection of technical commodities and many small niche companies offering bespoke products and solutions. More recently, as fluid power integrates with other technologies and as customers lean towards fewer suppliers, a growing trend in consolidation has emerged. Through a highly developed multi-channel strategy, Flowtech Fluidpower is at the forefront of this trend, being one of few globally, and the only UK aggregator to provide a full spectrum of fluid power capabilities. We are specialists within our field; our depth and width of product, broad engineering capabilities and unrivalled service levels are key differentiators, setting us apart from other competitors and enabling us to hold a unique position in our market with no sizeable competition.
- unique position within the fluid power supply chain with access to over 500,000 products across multiple global and exclusive own brands
- aligned with both the global supply base and the distributor network
- full spectrum capabilities in hydraulic and pneumatic component distribution, bespoke hydraulic solutions and proactive maintenance services
- world class purchasing and logistics function
- bespoke integrated trading platforms and IT systems
- technical 'know-how'
- multi-channel development strategy, extended through to OEMs and end users
- focused acquisition strategy capable of exploiting our core competences across all European industrial markets
Trends in our marketplace
The uncertainty over Brexit negotiations is being felt across all business sectors. Gross Domestic Product (GDP) growth decelerated following increased pressure on import prices as foreign producers aim to maintain margins. This was further compounded by the inflation rate of 2.7% without comparable wage increases forcing a further squeeze on consumer spending.
Despite diminished domestic economic conditions, the UK fluid power market experienced a strong year, demonstrating 6.1% combined growth of both pneumatic and hydraulic sales in 2017 (source: British Fluid Power Association (BFPA), 2017). This trend is largely a result of: global investment in trade and industry outside the UK, a stronger industrial recovery across Europe and a policy stimulus in China bolstering industrial demand in the Far East, particularly within construction. Moreover, a turnaround in oil markets strengthened additional industrial activity in the UK, leading to a marked growth within the domestic hydraulic market. The BFPA predicts encouraging growth in the UK; an average 2.6% for hydraulics and 3.2% for pneumatics from 2018 to 2021.
Estimated UK pneumatic equipment domestic market
Source: BFPA 2017
Estimated UK hydraulic equipment domestic market
Source: BFPA 2017
Following a predicted increase of 5% for pneumatic home and export sales in 2017, the BFPA predicts more modest growth of 2.7% in 2018. The impact of weakening automotive sales will likely be offset by stability in food and beverage, the key driver for the pneumatics market. Higher imported food costs are already allowing domestic producers to prosper as consumers explore UK-made alternatives. Unlike hydraulics, the pneumatic market is highly concentrated, enabling distributors to maintain their position. As a result, pneumatic equipment distribution has remained relatively stable over a 15-year period, a trend which is expected to continue.
In 2017 the BFPA predicted a sharp increase of 5.5% for the domestic hydraulic sector, its best performance since 2012 and a marked turnaround from two years of decline. External demand from Continental Europe and Asia further bolstered sales, with an expected total market growth of 7.2%. As post-Brexit negotiations continue, UK hydraulic growth is expected to flatten throughout 2018, before picking up again in 2019. Subdued growth is more a result of an unusual 50% year-on-year growth for mobile hydraulics in July and August 2017 than a general slump in demand. In 2018, industrial hydraulics is expected to grow 3.8% underpinned by specialist markets such as the high value test and measurement sector where UK producers have a strong competitive advantage and are less reliant on investment funding. Additionally, the UK machine tools market is benefiting from stronger external demand outside of the UK. Electro-hydraulics is a key area of development, with the National Fluid Power Centre launching an Electro-hydraulics, Control and Automation course in 2017. The BFPA remains optimistic about the UK hydraulic fluid power outlook, particularly due to investment recovery across Europe which should be long-lasting.
UK Industrial trends
The Group supplies industrial products used in production across all manufacturing industries. Examples include ducting and tubing, clips, clamps, pneumatic power tools and ring main systems. Selling into a wide and varied customer base, we service an extensive range of industry sectors thus spreading the risk of adverse market conditions and creating many opportunities for the Group. Despite the challenges faced by the domestic economy there are a number of positive trends and initiatives that Flowtech Fluidpower is ideally positioned to capitalise on:
- Manufacturing: British manufacturing shows a positive outlook. A weaker currency and global growth has made UK exports more competitive with USA, China and Europe showing strong performance
- Construction: While commercial building projects remain bound by capital constraints, by contrast the residential sector shows notable strength, supported by a UK Government commitment to build 1 million new homes by 2020
- Transport: Airbus and Boeing expansion plans along with extensive projects such as Crossrail 2 and London Underground should ensure that transportation construction will remain robust over the coming years
- Energy: Global investment in renewable energy is set to soar, notably from China, India, USA, Japan and Germany. UK offshore wind is the single largest part of the global renewables market. With plans to phase out UK coal by 2025, solar, onshore and offshore wind will offer cheaper alternatives to gas. Moreover, the British nuclear industry aims to cut construction costs by 30%, and potential Government backing could help finance new reactor plants within the UK
Estimated UK pneumatic export market
Source: BFPA 2017
Estimated UK hydraulic export market
Source: BFPA 2017