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AMA Research have published the 2nd edition of the report 'Highway Maintenance Market Report – UK 2015-2019 Analysis'. The report should be of particular interest to clients, contractors and other members of the supply chain including; suppliers, manufacturers, consulting engineers etc. and provides a comprehensive review of the highway maintenance sector.

Key areas covered:

• Structure and size of the UK Highway Maintenance sector - budgets, funding sources etc.


• Structure of responsibility for highway maintenance - Highways England, DLO'sm, Long Term Maintenance Contracts, Devolved Agencies.


• Review of England, Scotland, Wales and Northern Ireland highway maintenance sectors.


• Maintenance materials - market size, trends, key suppliers for asphalt, bitumen, surface dressings, aggregates etc.


• Market forecasts - overall sector and for key product sectors.


Key areas of insight include:

• Key market trends and the impact of Government spending on highways projects and maintenance.


• Structure of highway maintenance contracts in UK – Highways England, DLO’s, Contractors, Agencies etc – impact of recent Election on mix between in-house and external maintenance contracts.


• Review of key material sectors – asphalt, bitumen, surface dressings, aggregates etc – market sizes, trends and key players.


• Supply chain review – key players, material suppliers, long term maintenance contractors etc.


Some of the companies included:

A-one Colas, Amey, Ayton, Balfour Beatty Living Places, BEAR Scotland, Berkshire Macadams, Bestco Surfacing, Bituchem, Breedon Aggregates, Britcon, Carillion, Cemex, Chevron, Chris Wright Planing, Clearview Traffic, Cleveland Potash, CMS Pozament, Colas, Coldmac, Coneworx, Connect Plus, Dowhigh, Fitzgerald, FM Conway, Fosroc, Foster Contracting, Glendinning Highways, Halcrow, Hanson UK, Hazell & Jefferies Henry Williams, Holcim (Aggregate Industries), INEOS, Irish Salt Mining, J B Riney & Co, Jet Plant Hire, Jobling Purser, Jordan Surfacing, JPCS, Kiely Bros, Kier Group, Lafarge Tarmac, Lagan, Leith Group, Marlborough Surfacing, May Gurney, McQuillan Companies, Midland Quarry Products, Miles Macadam, Murrill Construction, Nynas, O’Hara Bros, O’Rourke, Parex, Peacock, Phoenix Specialist Solutions, Power Plane, Rhino Asphalt Solutions, R J Dance, Ringway/Eurovia, Ronacrete, Salt Union, Scotland TranServ, Shell, SIG UK, Specialist Surfacing, Spray Tanker Services, SSE Contracting, Stabilised Pavements, T J Services, Tarstone Surfacing, Tayside Contracts, Total, United Asphalt, Volker Highways, Wainwright, Whitemountain Quarry, Wirtgen.

Key areas covered in the report include:

HIGHWAY CONSTRUCTION AND MAINTENANCE BUDGETS

• Infrastructure Output – split by roads, rail, water, electricity etc. – output by sector 2010-14 – forecasts for infrastructure 2015-2019. Key authorities responsible for roads.


• Department of Transport Road Budgets – 2015-21. Programme Areas – Highways England, Local Authorities, Transport for London – major schemes, maintenance etc.


• Investment in Transport Infrastructure – DfT, Highways England - Resource / Capital – 2015-2021.


• Highways England – 13 operational regions - areas covered, roads managed 2015.


• Highways England – Indicative Budgets 2015-21 - Capital and Resource Budgets - Areas of Spend – New Projects, Major Schemes, Maintenance, Network Management, Technology Improvements, Smaller Schemes Budgets etc.


• Scotland, Wales, Northern Ireland – overview of road management agencies 2011-2014.


• Scotland – motorways and trunk road expenditure 2011-2016 – Road Improvements, Structural Repairs, Forth Bridge Crossing, Network Improvements, Routine and Winter Maintenance etc. Local Authority road expenditure 2008-12.


• Wales – roads expenditure 2009-14 – structural maintenance, routine/winter maintenance, street lighting etc.


HIGHWAY MAINTENANCE CONTRACTS

• Non-Trunk Road Network – management structure - rest of the network is maintained by 217 local authorities, including county councils, metropolitan boroughs, London boroughs, district councils etc.


• Reactive highway maintenance in the UK - market is split between DLO’s that are part of the council, and long term contracts - recent trends in mix - analysis of split, shares, differences between authorities, London Boroughs and regions (devolved authorities in Wales, Scotland, N. Ireland etc).


• Types of Contracts – Framework Agreements, Term Maintenance Contracts, Consortia, PFI.


• Local Government spending on transport – split by funding area – roads, rail, bus, parking services etc.


• Data on Road Network – number of vehicles, road length, class of roads etc, Spending on potholes.


• Local Authority spend on reactive road maintenance – England, Scotland, Wales, N. Ireland.


KEY PRODUCTS/MATERIALS

• Review of major areas of expenditure on highway treatments - products/services covered relate to the surface of the road which includes surface treatments and reinstatement of the road pavement and repairing manhole frames, gulleys and street lighting etc.


• Key Product Sectors - Bitumen macadam and asphalt manufacture and application, Surface dressing manufacture and application, Bitumen emulsion manufacture and applications, Aggregates for macadam and surface dressing. Special surfaces including Anti skid surfacing, slurry and micro surfacing, Footpath treatments, Road markings, Reinstatement products, manhole repair products, Road studs, Winter maintenance, Street lighting etc.


• Reviews of market size - trends, drivers, key manufacturers / suppliers, shares, future prospects.


CONTRACTOR REVIEW

• Key contractors – term maintenance contractors (Kier, Amey, Ringway, Balfour Beatty etc) specialist road contractors, consulting engineers etc.


• Company profiles

The Highway Maintenance market in the UK is valued at approximately £10 billion per annum and is a major part of UK infrastructure spending, which has been restricted for several years. Key areas of expenditure are road surfacing, drainage for new construction and improvements, street lighting and furniture. However, the Government is showing signs of recognising the need to invest more in road building and other transport projects, and the bad winters over the last 2 years has brought forward some extra funding for mending potholes - which is a contentious issue at a local political level.

There is a complex structure of responsibility for maintenance of highways: motorways and major trunk roads are managed by Highways England, while the rest of the road network is managed by various classes of local authorities, who either undertake the work with direct works teams, or award contracts to contractors to undertake the work on their behalf. The chart below gives the breakdown of responsibility for reactive highway maintenance in the UK. In overall terms, the market is split between direct labour organisations which are part of the council, and long term contracts awarded to external organisations specialising in term maintenance contracts.

There has been a rationalisation of local government authorities in the last 40 years and, at the same time, the move to local authorities awarding long term maintenance contracts steadily increased since 1974. Early contracts were of a short duration and it was difficult to organise and generate a reasonable level of profitability, so contract periods have lengthened allowing the contractor a chance to invest in plant and equipment necessary for the contract – as a result, current contracts run from 3-5 years up to 25 year PFI contracts. There has been a growth in contractor involvement in this market and companies such as Lafarge Tarmac, Amey, Ringway, Balfour Beatty, Kier etc. have taken many of these contracts in the last 20 years. As a result, as of early 2015, some 50% of all authorities have now created long term contracts for maintaining highways in their areas, though the split varies significantly between types of authorities and regions of the country.

The government is keen to explore more opportunities to bring private finance and expertise into the road network. The national network is complete although there are plans to improve sections of motorways which are most heavily trafficked, but there is a need to improve the regional network by improving roads which link national network motorways and improving local A roads. The government is examining the possibility of letting contracts in these areas which will embrace maintenance of existing roads and undertaking improvements, many of which are mentioned in the recently published DTP Road Investment Strategy. The combination of term maintenance contracts and new forms of regional contracts, and the anticipated increase in funding, should offer opportunities for the private sector.

Table Of Contents

Highway Maintenance Market Report - UK 2015-2019 Analysis
1. INTRODUCTION 7
1.1 BACKGROUND 7
1.2 SOURCES OF INFORMATION 7
2. SUMMARY 9
3. ECONOMIC ENVIRONMENT 13
3.1 GDP 13
3.2 INFLATION and INTEREST RATES 14
3.3 UNEMPLOYMENT 15
3.4 HOUSING and CONSTRUCTION 16
3.5 STERLING 17
3.6 CONCLUSIONS 17
4. LOCAL GOVERNMENT ORGANISATION AND STRUCTURE FOR HIGHWAY MAINTENANCE 19
4.1 BACKGROUND 19
4.2 ORGANISATION OF LOCAL GOVERNMENT IN THE UK 21
4.3 STRUCTURE OF AUTHORITIES RESPONSIBLE FOR HIGHWAY MAINTENANCE 22
4.4 MOTORWAYS AND TRUNK ROADS - ENGLAND, SCOTLAND AND NORTHERN IRELAND 23
4.4.1 Highways England 23
4.4.2 Transport Scotland 26
4.4.3 South Wales and North Wales Trunk Road Agencies 26
4.4.4 Transport NI 26
4.4.5 Non trunk road network - England, Scotland, Wales, Isle of Man, Channel Islands 27
5. TYPES OF CONTRACTS 29
5.1 BACKGROUND 29
5.2 FRAMEWORK AGREEMENTS 29
5.3 ANNUAL TENDERS 30
5.4 TERM MAINTENANCE CONTRACTS 30
5.5 BUYING CONSORTIA 30
5.6 PFI CONTRACTS 30
6. HIGHWAY EXSPENDITURE UK 32
6.1 BACKGROUND 32
6.2 HIGHWAYS ENGLAND EXPENDITURE 35
6.2.1 Background 35
6.3 SCOTLAND 37
6.4 WALES 39
6.5 LOCAL AUTHORITY EXPENDITURE ON HIGHWAY MAINTENANCE - ENGLAND - NON MOTORWAY AND TRUNK ROADS 40
6.5.1 Background 40
6.6 LONDON BOROUGHS 43
7. KEY MARKET INFLUENCES AND TRENDS 44
7 1 BACKGROUND 44
8. SPECIALIST HIGHWAY MAINTENANCE PRODUCTS AND PROCESSES 46
8.1 INTRODUCTION 46
8 2 BITUMEN MACADAM ASPHALT SURFACING 46
8.3 SURFACE DRESSING 50
8.4 SURFACE DRESSING AGGREGATES 52
8.5 RESIN ANTI-SKID SURFACING/HIGH FRICTION SURFACING 52
8.6 SLURRY SEAL- MICRO SURFACING 53
8.7 BITUMEN EMULSIONS 54
8.8 FOOTPATHS 55
8.9 ROAD MARKINGS 56
8.10 EMERGENCY HIGHWAY BITUMEN REINSTATEMENT PRODUCTS 57
8.10.1 Background 57
8.10.2 Manhole Levelling Compounds: 57
8.11 ROAD STUDS 58
8.12 WINTER MAINTENANCE 59
8.13 ROAD AND STREET LIGHTING 59
8.13.1 Background 59
8.13.2 Types of lighting 61
9. SURFACING CONTRACTORS 62
9.1 TYPES OF SURFACING CONTRACTORS 62
9.1.1 Bitumen Surfacing 62
9.1.2 Road Planing 63
9.1.3 Retread 64
9.1.4 Surface Dressing 64
9.1.5 Resin and Anti-Skid/High Friction Surfacing 65
9.1.6 Slurry Seal 65
9.1.7 Road Marking / Traffic Management 66
9.1.8 Street Furniture and Lighting 66
10. HIGHWAYS CONTRACTORS / MATERIAL SUPPLIERS 67
10.1 TERM MAINTENANCE CONTRACTORS 67
10.2 PRODUCT SUPPLIERS / DISTRIBUTORS 69
10.3 SPECIALIST ROAD CONTRACTORS 72
10.3.1 Consulting engineers 74
11. DISTRIBUTION CHANNELS 76
11.1 DIRECT TO CONTRACTOR/DIRECT LABOUR ORGANISATION 76
11.2 SPECIALIST DISTRIBUTORS 76
11.3 BUILDERS MERCHANTS 76
11.4 PLANT HIRE 77
12. FUTURE PROSPECTS 79
12.1 FUTURE TRENDS 80
APPENDIX 1 ASSOCIATED SUPPLIERS AND TRADE ASSOCIATIONS 83

TABLE 1
ANALYSIS OF LOCAL AUTHORITIES WITH HIGHWAY MAINTENANCE RESPONSIBILITY 2015 - SPLIT BY TYPE OF AUTHORITY, DLO'S AND LONG TERM CONTRACTS 9
TABLE 2 GDP DATA - 2012-2014 - KEY CONSTITUENT ELEMENTS 13
CHART 3 INTEREST RATES AND INFLATION (CPI) FROM 2000-2019 15
TABLE 4 EXCHANGE RATE FLUCTUATIONS 2009-2015 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 17
CHART 5 NON-RESIDENTIAL CONSTRUCTION OUTPUT NEW WORK AND RMI QUARTERLY ANALYSIS Q3 2011 TO Q3 2014 - BY VALUE (£ BILLION AT CURRENT PRICES) 19
CHART 6 NON-RESIDENTIAL CONSTRUCTION OUTPUT ANALYSIS BY SECTOR (INFRASTRUCTURE, EDUCATION ETC) 2014 - % BY VALUE 20
TABLE 7 INFRASTRUCTURE OUTPUT BY SECTOR (ROADS, RAILWAYS, WATER, ELECTRICITY, ETC - 2010-2014 - BY VALUE (£M) AND % CHANGE BY VALUE 21
TABLE 8 STRUCTURE OF HIGHWAYS ENGLAND OPERATIONAL AREAS 2015-REGIONS, OPERATIONAL AREAS COVERED, ROADS MANAGED 25
TABLE 9 ANALYSIS OF LOCAL AUTHORITIES WITH HIGHWAY MAINTENANCE RESPONSIBILITY 2015 - SPLIT BY TYPE OF AUTHORITY, DLO'S AND LONG TERM CONTRACTS 27
TABLE 10 AUTUMN SPENDING REVIEW - TRANSPORT LONG-TERM SPENDING PLANS BY PROGRAMME AREA 2015-2021 (HIGHWAYS ENGLAND, LA MAINTENANCE, HS2, LONDON TRANSPORT ETC) 32
TABLE 11 DEPARTMENT OF TRANSPORT - HIGHWAYS MAINTENANCE FUNDING ALLOCATIONS TO LOCAL AUTHORITIES 2015/16 - 2020/21 34
CHART 12 LOCAL GOVERNMENT SPENDING ON TRANSPORT - BY KEY SECTORS (ROADS, RAIL, BUS, PARKING ETC). 35
CHART 13 LICENSED VEHICLES BY TYPE 2013 36
CHART 14 % OF ROAD LENGTH AND TRAFFIC BY CLASSES OF ROAD IN GREAT BRITAIN 36
TABLE 15 PROGRAMME AREA EXPENDITURE - HIGHWAYS ENGLAND, FROM AUTUMN SPENDING REVIEW 2015/16-2012/21 37
TABLE 16 MOTORWAYS AND TRUNK ROADS EXPENDITURE - SCOTLAND 2011/12 - 2015/16 BY WORK AREA (STRUCTURAL REPAIRS, ROUTINE MAINTENANCE, ROAD IMPROVEMENTS ETC) 38
TABLE 17 ROADS AND TRANSPORT REVENUE EXPENDITURE WALES (SAFETY and ROUTINE MAINTENANCE, PLANNING, WINTER MAINTENANCE ETC) 2008/9- 2013/14 40
CHART 18 LOCAL GOVERNMENT - TOTAL MANAGED EXPENDITURE UK 2012-13 41
TABLE 19 ANALYSIS OF TOTAL and AVERAGE SPEND ON HIGHWAY MAINTENANCE - BY TYPES OF COUNCIL AUTHORITY 2012 - ENGLAND, SCOTLAND, WALES AND N. IRELAND 42
TABLE 20 ALARM SURVEY 2014 - NO. OF POTHOLES, AVERAGE COST AND TOTAL SPEND - ENGLAND AND WALES 45
TABLE 21 LOCAL AUTHORITY OVERALL ROAD MAINTENANCE BUDGETS 2013/2014 £M 45
TABLE 22 TOTAL PRODUCTION OF HOT MIX ASPHALT AND MACADAM MIXES IN UK 2009 - 2019 MILLION TONNES/NO. OF PRODUCTION PLANTS 48
TABLE 23 MAIN USES FOR BITUMEN - BASED ASPHALTS AND MACADAMS 2015 (HIGHWAY SURFACING, PATCHING/POTHOLES, OTHER SURFACING ETC) 49
CHART 24 LEADINMG SUPPLIERS OF ASPHALT AND MACADAM IN THE UK - MARKET SHARES 2015 49
TABLE 25 UK SURFACE DRESSING MARKET - BINDER SUPPLY - BITUMEN EMULSION - 2009-2019 (000 TONNES) 51
TABLE 26 SUPPLIERS OF SURFACE DRESSING BINDERS IN THE UK - ESTIMATED VOLUMES AND MARKET SHARE 2015 52
TABLE 27 BITUMEN EMULSION MARKET - MIX BY SURFACE DRESSING/OTHERS - 2009-2019 (000'S TONNES) 55
TABLE 28 MARKET SHARE ANALYSIS OF LEADING COMPANIES SUPPLYING CEMENT-BASED BAGGED MANHOLE LEVELLING COMPOUNDS AND SETTING 2015 58
TABLE 29 STREET LIGHTING MARKET SIZE - REVENUE EXPENDITURE AND FINANCING 2013-2014 60
TABLE 30 STREET LIGHTING MARKET 2014-2019 - SPLIT BY NEW PROJECTS/REPLACEMENT EQUIPMENT, MAINTENANCE, ENERGY CONSUMPTION 60
CHART 31 PRODUCT MIX OF PUBLIC SECTOR STREET LIGHTING 2014 - % BY VOLUME 61
CHART 32 MERCHANTS MARKET SHARES 2013 77
CHART 33 PLANT HIRE MARKET PRODUCT MIX IN THE ROADS SECTOR BY VALUE £M 78

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