A new analysis of the fire protection sector in 2010 describes a 'buffeted' market coming out of recession, and predicts imminent 'big changes' to the landscape.
The review, which has been produced by Plimsoll, contains both positive and negative revelations about the sector in 2010. The author of the study David Pattison said: "We have picked 400 strong companies that prove success can still be achieved in the fire protection industry, despite difficult trading conditions. They also prove that bad companies fail in a recession - good companies simply do not. These companies will lead the industry out of recession with some smart acquisitions to help maintain their recent success."
He further suggests that the market is due increased consolidation, with the number of companies in trouble leading to heightened takeover activity. "With too many companies chasing weakened demand, it is inevitable that there are likely to be a number of high profile mergers and takeovers. Further consolidation is needed to sort out the remaining dead wood. We have named 87 companies as the best acquisition prospects in the market."
According to the company, 147 of the 727 companies in the study are finishing the year in financial difficulty. To quote David Pattison again: "Having clung on through the bad times, many of these struggling companies are running out of time, and will fail unless a sustained recovery takes hold. Sadly, some of them are just too weak to carry on and there will be a spike of failures in the New Year. On the flipside, their demise will bring a welcome reduction in competitive pressure for those left.
"There are a group of 78 serial loss makers still operating in the market. For the second and even third year running, these companies have made a loss. While the rest have taken painful but necessary decisions to refocus on the bottom line, these reckless companies have continued to chase sale regardless. These companies have to cut their cloth accordingly or face the consequences.
"If you are going to make a success of 2011, you need to learn the lesson of the last 12 months. There are going to be big changes in the UK fire protection industry, with lots of takeovers, a number of high profile failures and even the odd surprise or two along the way".
The 2011 edition of the Plimsoll Industry Analysis, which individually assesses every company in the UK Fire Protection industry, is available now.
Posted October 28 2010