Building Services Industry Crucial to European Pump Market
The building services industry has emerged as perhaps the primary driver of not only the economies of several European countries, but of the market for commercial and industrial pumps continent wide. This has been especially true for centrifugal pump manufacturers. You see; the major applications for centrifugal pumps within commercial and industrial buildings tend to involve fire protection systems, pressure boosting, heating, ventilation, air-conditioning (HVAC), drainage and sewage. But the market's recovery has been a long and often winding road. The global economic recession hit the building services industry across Europe hard and especially hard in countries such as Greece, Italy and Spain. As a direct result of the 2008-09 collapse, revenue generated from new pump installations across the continent fell by roughly $11.5 million. In 2010 we did see a period of more or less steady building services sector growth primarily fueled by the refurbishment market in Scandinavia and Germany. However, the sustained debt crisis of 2011-12 led to a second slowdown in new building activity as the industry suffered under the weight of the austerity measures imposed by several European governments.
The building services industry in Greece, for instance, was hit pretty hard by both downturns and now an austerity induced reduction in public sector spending is set to further slow the growth of the building services segment of the commercial and industrial pumps market. And unfortunately, Southern Europe is rife with similar declines in new building activity, which of course shrank the market for centrifugal pump installations there as compared to both the years prior to the downturn and the rest of post downturn Europe. Across the rest of the continent, a brisk building services sector led recovery, sparked by of all things Poland's hosting of the European Football Championship and London's Olympic Games. These international sporting events proved a boon for the construction industry in form of new or upgraded stadiums, hotels, transport terminals and apartment complexes.
More importantly, enforcement of new European Union environmental impact legislation is likely to be the catalyst for an increased demand for new centrifugal pump orders across the continent. Since the goal of the EU's Ecodesign Directive is to reduce energy consumption in European buildings by 20% by 2020, compliance has increased the demand for pumps in new building construction and required mandatory replacement of existing pumps with energy-efficient alternatives. In 2011 and 2012 for instance, the centrifugal pumps replacement and spare parts market accounted for an estimated 50% of revenue generated by pump manufacturers selling to Europe's commercial and industrial builders. It's a pretty promising trend that we expect to shape the demand for centrifugal pumps from Europe's building services industry for the foreseeable future.