Gavin Murgatroyd of Gardiner & Theobald takes a closer look at curtain walling
From their peak in 2001, when lead times reached 23 weeks for a standard stick system, lead times for curtain walling have averaged 18 to 20 weeks for the past three years. The current average of 19 weeks is likely to continue over the next three years, although levels of orders on contractors’ books have increased. Unitised and more bespoke systems take longer to procure, however, at 26 to 30 weeks.
Two reasons dictate why lead times have remained constant: the competitiveness of the market and the resurgence of two-stage tenders. With the constriction of the commercial market and reduced demand for new office buildings, clients have tended to appoint main contractors on a fixed-price lump sum. This was perceived to be a better buying arrangement, as it passed more risk through to the main contractors, who were happy to take on fixed-price contracts in a shrinking market. With main contractors working under a simple commercial bidding arrangement, rather than a negotiation developing in two stages, little opportunity was left for early specialist cladding contractor involvement.
However, two-stage tenders are now seeing a resurgence, thanks to an increase in market activity. Clients are now keen to ensure early cladding contractor involvement to assist in the design of cladding solutions that can be developed within budgetary constraints. This also allows the question of practicality and buildability to be raised at the same time as suppliers’ capacity is being considered.
Curtain walling contractors can therefore manage the supply charge more effectively with early involvement, pre-booking supply and fabrication to ensure efficient delivery. This, coupled with the practice of concurrent design from the specialist cladding engineers and the client’s designers, smoothes the procurement process and keeps lead times at their current level of 19 weeks.
Research by Gardiner & Theobald has revealed a continued growth in the UK curtain walling market, which has a total estimated annual value of more than £600m (although no official figures exist).
Although the events of 9/11 immediately led to a slowdown on enquiries, overall levels have picked up significantly over the past two years. Year-on-year growth has been in excess of 10% per year and has reached about 30-40% more than 2001 levels.
The curtain walling market is by no means just London and the South-east, as it is often perceived to be. Major regeneration of commercial sectors in Manchester, Birmingham and Liverpool has boosted the market and bucked the trend of the shrinking South-east workload. Ten years ago, most curtain walling contractors would have found operating in regional cities a challenge, often charging a premium for delivering their product to the region and relying on imported erection gangs and temporary project bases managed from remote head offices. Today, the curtain walling market has responded to the regional demand and can serve most cities as efficiently as it can London and the South-east.
The use of more innovation in the design of residential accommodation has increased the demand for curtain walling, particularly for high-rise solutions where prefabrication and quick site erection are paramount. Although commercial projects are thinner on the ground, residential developments have boomed, as has the retail sector.
Ultimately, however, most curtain walling in the UK is used in the facades of commercial office developments, and the outputs for this sector form a direct barometer of market activity for curtain walling. With property analysts predicting an upturn in the demand for office space in 2007 and 2008, the curtain walling market will undoubtedly get much busier.
The market remains very competitive with tight margins and only small inflationary rises being passed to customers. The Gardiner & Theobald tender price indicator shows very low price rises for this sector over the past three years, and suggests increases of between 2 and 3% over each of the next two years. The chart shows the rate of increase peaking in 2007/2008 at 3.5% per annum.
Materials account for about 30-35% of the total cost of a unit of curtain walling, with the remaining costs for design, installation, production and overheads. The cost of curtain walling is therefore not as sensitive to fluctuations in raw material prices as other forms of cladding materials, such as profiled metal decking and sheeting.
About 60% of the total cost of curtain walling is for design, financing, mock-ups, and sample testing, installation and overheads. The use of any standard system will therefore produce more economic prices than a bespoke solution, as the prototype design and testing will already have been paid for and installation is a repetitious but efficient operation.
Installation costs continue to follow the normal trends of supply and demand in the wider construction industry since work tends to be on a project-by-project basis rather than term arrangements. When times are good, labour tends to show little allegiance to a particular firm and the pure economic factors affect the cost of labour. The end of a project is particularly important to keep an eye on, as installers will be on the look-out for their next job to provide continuity of work.
Stainless steel costs have increased due to global increases in the market cost of steelwork, and curtain walling systems with large panels of stainless steel have increased in cost by 20-30%. However, as the majority of curtain wall framing tends to be fabricated from extruded aluminium sections, the cost of steel has not had a huge impact on curtain walling overall. Most contractors are reporting that suppliers
are under pressure to maintain margins and competitiveness. Glass manufacturers have passed on a 2% increase in energy costs for glass production to cladding contractors. Similar increases are expected for all energy-intensive processes including aluminium smelters and gasket producers, but these should not result in large hikes in tender prices.
The tender price for glass elements has benefited over the past two or three years from increased competition. Both St Gobain and Glaverbell have made significant impact on the market with their products, and are supplying glass at competitive rates to take more volume. There are also other glass manufacturers in Eastern Europe and the Far East endeavouring to break into the UK market.
The dominance of European curtain walling contractors in the UK has not yet been fully challenged by the potential of cheaper curtain walling sourced from China and the Far East. Until institutionally acceptable products are tried and tested in the UK market, sourcing from European contractors is set to continue. But continued innovation in quality development and the finite European market supply may eventually threaten manufacturers and allow other products into the UK.
Curtain walling specialists can be compared to the automotive industry in their aim to create certainty and stability in the supply chain. Many large automotive firms are now nothing more than assemblers, with preassembled parts and subassemblies being brought from various sources for incorporation into the final product. In the same way, the curtain walling specialist contractor purchases glass from one manufacturer, extrusions from another and gaskets from a third, bundling them together with design and installation.
The majority of curtain walling and cladding contractors offer CAD/CAM technology, which effectively speeds up the production design and manufacturing process. They have applied automated materials management and inventory control systems to speed up the process and reduce costly mistakes and waste. However, although the front end of the design process has been automated, along with tooling and the production of subassemblies, the final assembly process is still predominantly carried out by manual labour. As such, the assembly process carries heavy labour costs and the potential for the effects of human error on production quality control.
We predict that the leading curtain walling firms will focus their investment and efforts in this area over the next few years, aiming for a completely automated assembly process and closer integration between design and production. Leading specialist contractors are calling off “just in time” orders to reduce the cost of financing work in progress. There is, however, some opposition to this as a number of firms prefer to have the majority of the system stored off site before work commences in order to supply a complete system.
Recent innovations in cladding technology, such as systems for the Swiss Re tower and the Greater London Authority’s City Hall, have illustrated how flexible cladding can be used to create stunning visual landmark projects.
The technology behind such achievements is now not particularly innovative, as all development research has been tried, tested and implemented. This facilitates the design and specification of more dramatic and challenging cladding envelopes, which the industry is now experienced in providing for a reasonable market cost. Cladding with curves in three dimensions and individually sized pieces, although not standard, are now achievable and could be impacting more of our skylines.
The main aesthetic feature of curtain walling tends to be the glazing, and the choice and specification of glazing is paramount to the overall appearance of the envelope. Developments in glazing technology will continue to benefit the industry, with solar-responsive and thermally-efficient glazing becoming standard. Innovations such as low-iron glass have reduced in price over the past few years to the point where they are no longer considered a high-cost optional extra. Like all new cars now being supplied with CD players, in a competitive market yesterday’s special becomes today’s standard.
A successful London 2012 Olympic bid would no doubt benefit the curtain walling market. With several iconic buildings proposed for the games, the cladding treatment will inevitably be special. This may effect the overall capacity of the market, costs and lead times, as a successful bid will demands that project are completed on time come what may.