The meeting was well attended, with about 70 representatives from some 30 to 40 companies. In a reprise of a talk that was first presented at the SMACNA annual convention, Hughes said that the future of spiral duct manufacturing is indeed bright. While spiral duct comprises about 26% of the overall market today, it is expected to increase to nearly 31% over the next five years - representing some real growth opportunities for both installers and fabricators.
This would reflect a decline in the use of rectangular duct, from 63% to 58%. There is also an anticipated increase in the use of oval duct during that period, from 4.2% to 4.7%, with an "other" category declining slightly, from 6.9% to 6.7%.
The intensity of the competition is expected to increase as well. On a scale of 0-7, with the 0-1 range representing "little competition," three years ago the competition among manufacturers rated a 5.3; today it is a robust 6.1.
Asked if they felt that there would be a pricing increase from outside fabricators over the next three to five years, on a scale of 1-7 with 7 indicating a strong increase in prices, SMACNA members registered a 4.5; while SPIDA members registered a 4.0. While SMACNA members felt the same about ductwork produced internally, SPIDA members felt prices for internal duct would rise even more.
The sheer number of duct fabricators continues to climb: on a scale of 1-7, SMACNA members registered a 3.4 regarding the statement "There is a trend toward the consolidation of duct fabricators in my market area." Non-SMACNA members registered even lower, at 3.0.
Saturation point?There was even more disagreement on whether the manufacturers had reached a saturation point. SMACNA members tended to say there is more excess capacity for duct fabrication than non-members. But each indicated there is still more room for additional growth.
On a survey of market trends, on a scale of 1-7, SMACNA members registered a 4.7 on whether or not non-installing fabricators have a significant and growing share in the market. There was a huge disparity among SMACNA members and non-members about training, with SMACNA members feeling reasonably assured that both fabrication and installation training is reasonably available. Non-members couldn't say the same.
Among buying criteria in selecting a duct supplier, quality and delivery time were the two main criteria among both groups.
When duct is purchased, there is more of a tendency to buy spiral from non-installing fabricators. Nearly 16% of non-members said they buy rectangular duct from other installers; it's even higher for SMACNA members at 18.2%. But when it comes to spiral, only 6.5% of SMACNA members said they buy it from other installers, and only 1.5% of non-members do so.
Current sales by non-installing fabricators are 30.9%, according to FMI. This is projected to grow to 44.1% of the total in the next three to five years.
Much ductwork is still manufactured for the local market only by fabricators. But, surprisingly, more is being shipped longer distances. While just over 40% of SPIDA members said they fabricate for a local market only, more than 20% also said they ship distances greater than 300 miles.
Installing contractors still tend to make most of their own duct, by 69%. But this is expected to change over the next three to five years. By then, the number of installers who make their own pipe is expected to dip below 60%.
In summary, FMI noted the following general market trends:
- Separation of fabrication and installation functions.
- Non-installing fabrication to realize major growth.
- Product standardization.
- Expectation of increasing competition.
- Growing spiral market.
- Increased automation.
SPIDA holds a summer membership meeting this month, May 18-20, at Ocean Creek Plantation Resort in Myrtle Beach, S.C. For more information contact Toni Sylvester at 803-732-5818; fax 803-732-0135.