Fire Detection and Alarms Systems Rest of Europe. Compiled by: Raphael Chalogany Quality approved: Jeremy Towler Project no: October 2012

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1 Fire Detection and Alarms Systems Rest of Europe Compiled by: Raphael Chalogany Quality approved: Jeremy Towler Project no: October 2012

2 Fire Detection and Alarms Systems Spain Compiled by: Raphael Chalogany Quality approved: Jeremy Towler Project no: February 2012

3 Country Overview Spain 2 The 2011 Spanish Fire Detection & Alarm (FDA) market reflects the country s economic situation, in recession from the start of the 2008 global downturn. The market, is valued at around US$ 245 million in 2011, which represents a reduction of 30.5% compared to our last report in The product market alone dropped by an average of 30%, and the total business market value would have been much worse were it not for the positive growth of the service and maintenance market which has shown a progression of 11% compared to

4 Key Economic Indicators Spain Indicator Population Million GDP USD Bn 1, , , , ,615.9 % change % Inflation % Total Construction Output New dwellings (completions) USD Bn Thousands Residential USD Bn % change % Non-residential USD Bn % change % Civil Engineering USD Bn % change %

5 Country Overview Spain Political / Legal / Fire regulations Economics Social Technology Mariano Rajoy Brey, born 1955, former leader of the Spanish Socialist Workers Party (PSOE), is the new Prime Minister-elect since 20 November 2011, succeeding José Luis Rodríguez Zapatero who governed from 17 April Fire regulations have been influenced by a new revision of the standard UNE : 2009 which became one of the most important regulations for Spanish fire detection systems. It is based on the technical specification CEN/TS 54-14:2004, for its structure and content. The technical specification CEN/TS 54-14:2004 was prepared by the Technical Committee CEN/TC 72 "Automatic Fire Detection Systems" in collaboration with the CEA (European Insurance Committee), and EUROALARM (Association of European Manufacturers of Fire Alarm and Intrusion Systems). The essential impact of the UNE : 2009 is that the life cycle of detectors will be limited to 10 years starting in Spanish Prime Minister-elect Mariano Rajoy inherits a shrinking economy and a 22.8% jobless rate on taking office on Dec. 21 with a mandate to slash the Eurozone s third-largest budget deficit. Europe's sovereign debt crisis is affecting the financial sector and is turning more systemic. Spain's credit rating was cut for the third time in three years on 18 October 2011 by Standard & Poor's to AAas slowing growth and rising defaults threaten banks. Recovery will depend upon both Europe effectively applying the decisions recently reached and Spain meeting its commitments and carrying out the necessary reforms. It is broadly accepted that both products and installers of fire detection systems have to be certified. For each installation project, an installation certificate must be delivered to the client. The technical trend is towards integration with other applications such as public address systems, air conditioning, security and others. Aspirating systems have been growing significantly, while voice and video are expected to grow. 4 4

6 Country Overview Spain Construction market The construction sector has been cut by half between 2008 and 2010, and the industry is still not showing signs of stabilizing. Euroconstruct estimates there will be an additional fall of -19% for 2011, followed by -9% in In the non-residential sector, the period will still be very recessive, around -10%, with a significant already built non-residential floor area to be absorbed. Civil engineering is very negative, around -35% in 2011, and the trend will remain in 2012 due to the different austerity measures in public spending. The residential construction is also in crisis due to large housing inventories available in the market, but the Real-Estate sector could improve to a -0.1% in Presence of manufacturers The fire detection systems market is traditionally supported by manufacturers. Top manufacturers include foreign global players such as Honeywell Life Safety, UTC, Siemens, Tyco and Bosch, as well as national players such as Aguilera Electronics and Cofem. Specialist fire Installers/ integrators/ Value Added resellers (VARS) There are many companies in this group; however, only a few have the size to compete at the national level. Main system integrators promoting fire detection systems are Honeywell, Siemens, JCI, Guardal, Avantronic and others. Fire detection installers are Prosegur (Spain), Niscayah (Sweden), Pefipresa (Minimax, Germany), Grupo EMTE (Spain) and others. Main distributors are Komtes (Spain), Casmar (Spain). ADI, Apollo and others. 5 5

7 Market Size 2011 Performance and Forecast (USD Millions) Total FDA* Products CAGR CAGR % 4.9% Value Add % 5.5% Installed Systems Service/ Maintenance/ Testing Total Business Comments % 5.2% % 4.1% % 5.0% The 2011 total fire security systems market (installed market + service and maintenance market) is valued at USD million, a 5.5% drop on the previous year. In 2010, the total market had already shrunk by 3%. In fact, the installed market shrunk by 7% and the largest drop is to be a attributed to the product market with a 10% contraction compared to The service and maintenance market remained stable since such contracts are running for many years. Although key players in the industry believe that growth will be back to a 10% level in 2015 and 2016, far from the previous growth levels above 20%, our compound annual growth forecast for the period 2012 to 2016 remains at a 5% level due to a low growth period up to * Fire Detection and Alarm 6 6

8 Industry Trends and Drivers Market drivers Market threats The Spanish fire detection systems market has been in recession since the 2008 global economic crisis, with 2011 being the worse year. Most vertical sectors have contracted between 5 and 10% compared to the previous year during that period. Traditional Spanish market drivers such as the construction sector and governmental projects have failed to support the industry, due to the recession and the necessity for the government to reduce the national debt. However, the construction sector is still largely the main market driver for the fire detection systems industry. The energy sector also became a significant market driver during the past few years. Legislation is another driver affecting the market. The new standard UNE : 2009 is expected to create a demand worth around USD 2.67 million, thanks to the new mandatory obligation to replace detectors reaching 10 years of age. Total business solutions including WET, MIST, Dry extinguishing or intelligent response are likely to have a positive impact on the market as well. Main threats to the market come from uncertainties generated by the national economic crisis as well as the effects of external factors such as the European debt crisis. Consequences of the economic situation have a negative impact on the national fire systems market, including the following: Large reduction of public and private investments contributing to a reduction in market size Maintenance market on hold The equipment life cycle is being extended to the maximum in order to save costs A contraction of the construction market with a direct negative impact on the number of projects available in the market A price driven market is, to the detriment of quality A decrease in the number of bank loans creating a negative impact on demand overall. 7 7

9 FDA Products Market Size 2011 (USD Millions) 1% 4% 3% 1% 7% 1% Sensors/ Detectors Call Points 4.47 Non-addressable Fire Alarm Panels Addressable Fire Alarm Panels % 50% Annunciators / mimics 0.50 Audible alarm devices (with or without voice) 2.81 Flashers / Strobes % 5% Input /Output Modules 6.94 Network Supervisory elements 1.95 Other (e.g. fireman s telephone system) 0.90 Product trends Sensors / Detectors are traditionally the largest product segment and accounted for 50% of the fire detection products market in The second and third leading product segments belong to the fire panels (the addressable panel being the largest), together accounting for 28% of FDA products. Network supervisory elements follow with 7%, and call points with 5%. Others (annunciators, audible alarm devices, flashers and input/output modules) range between 1 and 4. The share of non-addressable fire panels has risen from below 20% in 2007 to over 40% in 2011, which we attribute to the high proportion of retrofit and maintenance sales, as well as pressure for the lowest cost system, during this period of austerity. We would expect the market to swing back to higher value addressable panels when the economy rebounds 8 8

10 Country flag Systems Segmentation Wireless / Wired Wired / Wireless Value (USD million) Wired / Wireless Volume (Units) Wired, $84m, 94% Wireless, $5m, 6% Wired, units, 98% Wireless, units, 2% System trends In 2011, wireless systems are still rare compared to wired fire detection systems. The current evolution towards integrated solutions will have a positive impact on the wireless technology. Key benefits of the wireless technology, easy installation and less commissioning, each driving cost reductions, are increasingly appreciated by the end-user, making this technology a sustainable solution. 9 9

11 Systems Segmentation Protocols IP 25% Other 0% Priopretary 32% CANbus 0% KNX/EIE 10% BacNet 12% ModBus 20% Lon 1% System trends This system segmentation by protocols is the reflection of answers given by interview respondents, however the result is only indicative as quite a few companies did not provide an answer to this particular question. The analysis revealed that proprietary protocols accounted for just over a third of the protocols used in the fire alarm detection systems in IP and Modbus protocols have a quarter and 1/5 of the market respectively. BacNet and KNX/EIE account for around 10% each. The KNX solution might take a larger share in the future as more intelligent solutions are being converged on that platform

12 Detector segmentation Market Size % 1% Value: US$46,56m 0% 2% 0% 14% 9% 6% 55% 2% 1% 0% Volume: 898,024 units 0% 0% 4% 12% 7% 7% 56% Ionisation Photoelectric smoke detectors Point-type heat (Fixed Temperature) Point-type heat (Rate of Rise) Multi-sensor detectors: Gas detectors for fire: 0% 7% 8% Gas detectors for safety (gas leakage) Flame detectors 3% 3% Line-type smoke detectors: Detector trends In 2011, detectors account for close to 51% of total product sales. Ionization detectors have disappeared from all the respondents sales. Their share is at 0%. The photoelectric (optical) detector or photoelectric with an additional technology are now the detector of preference: photoelectric + heat is the largest segment. Aspirating detector demand is growing, accounting for 14% by value and 12% by volume. Multi-detectors have not performed as expected due to their higher cost. Price erosion is a major trend since

13 Detector Segmentation Non-addressable / Addressable Addressable / Non-Addressable Value (US$m) Addressable / Non-Addressable Volume (Units) Addressable detectors, $64.98m, 73% Nonaddressable detectors, $23.63m, 27% Addressable detectors, 654,184 units, 75% Nonaddressable detectors, 217,731 units, 25% System trends A non-addressable fire alarm system, also known as a zoned system, is considered a low-cost solution for some properties. However, an addressable system is much more advanced than the non-addressable type, with a higher degree of programming flexibility and single-point detection, making it a much more attractive solution. Another advantage in favour of addressable systems is that the new generation of analogue addressable fire alarm control panels is much more advanced in terms of reducing the amount of false alarms. In Spain, addressable detectors have largely outnumbered non-addressable detectors both in value and in volume, according to key respondents. This trend was confirmed by the main manufacturers as well as large installers such as Prosegur and distributors such as ADI. In the current economic climate, the price reduction of addressable systems in addition to their technical superiority, has largely contributed to the popularity of such systems

14 Country flag Detector segmentation Multi-sensor detectors Other combinations 0% Photoelectric & CO & Heat, $0.11m, 4% Photoelectric & CO, $0.12m, 4% Multi-sensors detectors, value US$ million Combination of Photoelectric & Heat, $2.6m, 92% Other combination 0% Photoelectric & CO & Heat, 2,285 units, 4% Photoelectric & CO, 2,755 units, 5% Multi-sensors detectors, volume (units) Combination of Photoelectric & Heat, 54,456 units, 91% Multi-sensor detector trends Combinations of photoelectric & heat detectors hold the largest market share in the multisensor product range, and their share is still growing. Combinations of photoelectric & CO & heat, or photoelectric & CO, only account for 4% market share each. The other combinations are insignificant

15 Country flag Detector segmentation Gas Detectors for fire Gas detector Source: Det-Tronics Portable gas detector Source: Wikipedia Gas detector Source: Tyco Comments A gas detector is a device which detects the presence of various gases within an area, usually as part of a safety system. Several types of gas detectors can be found: multi gas detectors, single gas detectors, disposable single gas detectors, portable gas detectors and others. In 2011, no gas detectors for fire have been reported by respondents during our study in Spain. In our 2007 study, gas detectors where estimated at less than 1% of product sales

16 Detector segmentation Line-type smoke (beam) detectors Line -type (beam) smoke detectors, value (US$m) Line -type (beam) smoke detectors, volume (units) Projected, $0.73m, 18% Reflective, 52,416 units, 78% Reflective, $3.25m, 82% Projected, 14,666 units, 22% Comments The reflective line-type (beam) detector type account for a large majority, mainly for cost reasons. Although beam smoke detection was previously seen as somehow unreliable at protecting large areas as building movement and accessibility made these devices both inaccurate and time-consuming to install and maintain, technological improvements have increased their reliability, thus contributing to the larger demand

17 Detector segmentation Aspirating / Air sampling Systems Aspirating / air sampling detectors, value (US$m) Aspirating / air sampling detectors, volume (units) Point detector based, 1.70, 29% Point detector based, 33,066, 30% Laser based, 4.25, 71% Laser based, 76,391, 70% Comments There are now several air sampling smoke detection systems on the world Fire Protection market that operate at 'High Sensitivity' levels. They are usually either laser based, or point based detectors. A high sensitivity aspirating detector can cover the same volume as many traditional point detectors, but with added advantages. Laser based aspirating / air sampling system sales are the largest product segment in this category, accounting for 71% of total sales by value. The remaining 29% are point detector based detection systems

18 USD million Country flag Safety Systems Market Size 2011 (USD Millions) Voice Evacuation Systems Mass Notification Systems Advanced Fire Extinguishing Systems Emergency Lighting Control Systems System trends The total safety systems market is evaluated around USD 43 million in BSRIA estimates that a large proportion of voice evacuation systems, advanced fire extinguishing systems and emergency lighting control systems are installed in public buildings such as airports, stations or hospitals and other public buildings. The most popular safety systems are Advanced fire extinguishing systems, followed by Emergency lighting control systems and Voice evacuation systems. Mass notification systems have not been identified but we believe they represent a small part of the market

19 Country flag Safety Systems Market drivers and trends Voice Evacuation / Voice Alarm Systems Voice evacuation systems (VES) provide an effective way to deliver instructions to selected zones thus providing a more efficient control over the building evacuation. VES include Voice Communication Systems (VEC) which provide two-way communication in refuge areas to assist rescue teams where assistance is required and to reassure people that help is on the way. Estimated at USD 11 million in 2011, VES remain under-developed in Spain compared to other European markets such as the UK. None of our respondents reported sales of such systems and estimations are based on their views of the market and comparisons with other European markets. Suppliers include Bosch Security Systems, Honeywell and Siemens Building Technologies. Mass notification systems Mass notification systems have not been reported in Spain. However, we believe they represent a small proportion of the market

20 Safety Systems Market drivers and trends Advanced extinguishing systems Advanced extinguishing systems (AES) are common in the non-domestic building sector, especially in high security environments where dangerous substances are stored or used. New fire suppression techniques include inert and halocarbon gaseous agents, water mist systems, compressed-air-foam systems, and solid gas generators. Valued around USD 15 million, the AES market holds around a third of the total safety systems market. Suppliers include UTC, Siemens Building Technologies and others. Emergency lighting control systems The Emergency Lighting Systems market is a huge market across all European countries including Spain. However, Emergency Lighting Control Systems represent only a small fraction of that market, estimated at around USD 14 million in Market leaders include Legrand (URA), Schneider Electric and Cooper Industries

21 Value-added and Service Market Size 2011 (USD millions) Value added market size The 2011 value-added market is valued around USD 98 million, which represents almost 52% of the total installed market. This proportion is much lower since our 2007report, with a decrease estimated at 9%. Trend in valued added size The value-added market declined by -4.4% since However, a timid growth of under 2% is expected in 2012 and the forecast is positive for the period thereafter. The compound annual growth rate (CAGR) for the period is forecasted to remain under 6%, in line with the total market growth for that period. Service market size The service market is valued at USD 56 million, which represents around 23% of the total business market. This proportion is similar to the 2007 figure, although the market value of this particular segment increased by around 11%. The service and maintenance market played an important role during the crisis by compensating the decline of the total market. Trend in Service market The service and maintenance market grew by an average of 2.5% during the period This is due to the expansion of the project base created by the completion of projects started in previous years. The forecasted compound annual growth rate for the period is around 4%

22 Market Shares of Top 5 Product and Systems Suppliers Supplier Product Sales (US$ Millions) Honeywell Group TYCO Group 2.72 Siemens Building Technologies 5.11 Bosch Security Systems 1.40 UTC Fire &Security 5.94 Others Total Supplier Installed System Sales (US$ Millions) Prosegur Gunnebo Honeywell Group TYCO Group Siemens Building Bosch Security UTC Fire OTHERS Prosegur Gunnebo Niscayah Niscayah 9.30 Pefipresa 9.01 Siemens Building Technologies 6.98 Others Pefipresa Siemens Building Technologies OTHERS Total

23 Market Competition Comments on the market share Honeywell is the strongest manufacturer with a market share reaching almost 40%. The company is followed by global players such as Tyco and Siemens. Prosegur is the market leader in the installed systems market, with both Spanish and global players competing with each other. Competition among manufacturers The top 5 manufacturers of fire detection systems account for 58% of the product market. All respondents described a market where competition among them increased during the financial crisis due to a lower number of projects. The level of competition among manufacturers is high. Competition among Specialist fire installers / integrators / VARs Other comments on competition The top 5 integrators have 39% of the specialist fire installer and integrator market. Competition is fierce between them due to the diminution of projects in the Spanish market. Generally, the level of competition has increased since the recession started in 2008, and should remain at a high level in the forecasted period up to There should be little changes within the largest players and their market shares due to the rigidity of the market, characterized by product and system homologations and certifications. However, competition from cheap product manufacturers and installers will put further pressure on the low and middle range of the market

24 Main Vertical Markets by Building Type Banking / Finance / Insurance Offices Hotels / Catering Retail Entertainment / Leisure / Arts Transport Buildings Other Commercial Education Health Central/ Local Government Other Public High tech Manufacturing Life Science (Pharma / Biotech) Industrial Assembly Communications & Computers Warehouses Other Industrial High End Multi Ocupacy Residential USD millions 23 23

25 Trends in Main Vertical Markets by Building Type (1) Banking/ Finance/ Insurance Commercial Offices Hotels and Restaurants Retail Entertainment and Leisure Transportation buildings Other commercial Education Health Banking account for 5% of fire alarm detection product sales. We had reported 6% during our last study in With 12% each, offices and retail, are the largest vertical markets in our study. For the office segment, this is 2 percentage points higher than our 2007 figure. Spain remains a tourism driven economy, and the hotels and restaurants vertical sector account for 6% of the market. This vertical remains relatively stable. Retail accounts for 12% of product sales, down from 14% reported previously. Entertainment is a small vertical sector, currently at 1% of product sales. Its share could increase if the economy picks up. Previous 2007 data showed a 5% market share. This sector created demand during the pre-crisis period and holds 6% market share. It has gone down since 2008 due to the current lack of investment, but remained similar to our 2007 figure. Small vertical sector which accounted for 2% of sales in 2011, a 1 percentage point drop since our last report. Education accounts for 4.5%, down from 6% in 2007, now back to our 2003 level. Health is a large sector for fire alarm detection devices, accounting for 7% of sales in Budget reductions have however reduced the size of this market by 3 percentage point compared to

26 Trends in Main Vertical Markets by Building Type (2) Central/ Local Government Other public (museums, emergency services, penitentiary) High-tech manufacturing Life science and Pharmaceutical Industrial Assembly Communications & computer buildings Demand from this sector is traditionally large, but few projects have been created in the last two years. The sector holds 9% market share, a 1 percentage point drop from This sector creates demand for some players, either for fire alarm detection systems in museums, or in prisons. This vertical recorded 3% of the total market which represents +1 percentage point change on This sector recorded 5% in 2011, which represents an increase of 2 percentage points on Life science recorded only 3% in 2011, down 5 percentage points on 2007 data. Industry recorded 7.5% in 2011, a 1.5 percentage point drop since 2007, reflecting the current sluggish economic conditions. This sector, mainly data centers, recorded 6% market share in sales of fire alarm detection devices in 2011, a 2 percentage point increase on 2007 data. Warehouses Warehouses accounted for 7%. Other industrial (utilities, oil and gas refineries) High end multioccupancy residential This sector recorded 3%, a 0.5 percentage point increase on 2007 data. This sector recorded 10% in

27 Product Distribution Channels Ro ute 1 (Di rec t) Rout e 2 (Dire ct) Product / System Rout Rout Manufacturers e 3 e 4 (Indi (Indi rect) rect) 7% 1% 16% 76% Electrical Contractor (installer) Distributor / Wholesaler Specialist Fire Contractor / Systems Integrator Rout e 5 (Indi rect) 0% Specialist Fire Contractors that manufacture own panels Owner / Developer / End User / General Contractors Direct to end client Electrical contractor Distributor / Wholesaler Specialist fire installer / VARs Specialist fire Contractors that manufacture own panels Routes to market highlight strategic differences between top players. Siemens for instance sells partly direct when Honeywell sells only through indirect channels. This route is down 1 percentage point on the proportion we recorded in This has become the smallest channel to market, down from 23% recorded in our 2007 study and suggests that virtually all this business has shifted to the Specialist fire installer / VARs. This would imply a stricter enforcement to regulations which require fire systems to be installed by certified companies and individuals Distributors, including such companies as Komtes, Casmar and ADI have 16% market share in total, down moderately from 20% recorded in At 76%, VARs are now by far the preferred route to market for fire detection products in the Spanish market, up from the 48% we recorded in This route is not used is the Spanish market

28 Market Forecast Growth drivers Traditionally, growth drivers of fire alarm detection systems are public investment, the construction sector, the financial sector (credits) and regulation. All these growth drivers have failed to create demand since the economic crisis started in A recent driver comes from additional EU regulations. According to the recent EN regulation, the maximum life cycle of a detector is now 10 years, and all detectors currently installed reaching this age limit, will have to be replaced. Despite the fact that the fire alarm detection market is quite conservative, particularly with respect to connecting fire systems with other building systems, the new trend towards system integration will have a positive impact on fire detection system sales over the forecast period. Fire detection and alarm market growth The fire detection and alarm systems market recorded around USD 245 million in 2011, recording a negative growth since 2008 and The market is forecasted to grow by 5% in the period This is partially due to the impact of the current austerity programs and economic difficulties. The IMF expects a CAGR under 3% during the period. The market will not find the previous levels of support from the construction industry which is forecasted to remain at low growth levels. On the positive side, we have the impact of the EU regulations on the detector market driving growth in the retrofit construction market essentially

29 Disclaimer COPYRIGHT, All rights reserved. This document may not be reproduced, transmitted or redistributed in part or full without prior written consent from a BSRIA Director BSRIA Limited Old Bracknell lane West, Bracknell, Berkshire, RG12 7AH, United Kingdom T: +44(0) F: +44(0)