News I published 12 September 2022

Despite the war in Ukraine, the European installation market is heating up

The start of 2022 was characterised by uncertainty, of which the Russian invasion of Ukraine was a major cause. Additionally, uncertainty in the construction and installation sector is being fed by ongoing supply chain issues and the accelerating of the energy transition. The question is what influence these factors have on the activity of installation companies?

That uncertainty and tension in the first quarter was indeed felt by many HVAC installers and plumbers, as is apparent in the results of USP Marketing Consultancy’s European Mechanical Installation Monitor. The interviews with installers from six European show that turnovers of installation companies declined somewhat in that first quarter.

Turnover balances mainly remained positive

Despite the decline, the turnover balance in Q1 was still positive in all countries except Poland, where after three positive quarters, the turnover balance tuned negative again. In a way this does not surprise, as Poland is closest to the war zone. The second quarter, turnovers of installation companies rose again, however. Although the turnover balance in Poland was still negative in Q2, turnover also increased there compared to Q1.

So in the second quarter turnovers were on the rise again, and installers’ expectations for the third quarter are even better. Despite the dip in Q1 and the negative balance in Poland, the war in Ukraine seems to have little impact on the installation companies. That is more or less in line with our forecasts for the entire construction and installation sector. They show that growth in these sectors will slow down a bit, but growth is expected still.

Order books of installers are on the rise

Especially in the installation sector, the quest for sustainability and the energy transition are important drivers. Both come with a need for new installations in buildings and consequently boost the installation sector. The energy crisis caused by the war is putting even greater pressure on the transition to sustainable energy sources. The result is even more work for installers, which is also reflected by their order books.

As the graphs show, order books suddenly increased a lot in four of the six countries in the second quarter. Dutch installers are busiest, with on average a whopping 10,3 months of work scheduled. In Germany and the UK, order books are also at an all-time high, with an average 8,9 and 7,7 months respectively. The only places where order books declined were in France and Poland, but even there installers have about six months of work planned on average.

Small influence on many trends

So what exactly is the impact of the war in Ukraine on the European installation sector? Looking at turnovers, aside from a slight dip in Q1, that impact is quite limited. In the whole European construction and installation sector, we see pretty much the same: lower growth but growth nonetheless. From this perspective, the impact of the war in Ukraine on these sectors is rather small.

Looking at order books, installers are a lot busier all of a sudden, but that is not just caused by the war in Ukraine and the resulting energy shortages. Sustainability and the energy transition have been strong trends for quite some time now, and their influence is increasing due to increased visibility of climate change. More than before, initiatives and climate policies like for instance the European Green Deal are implemented, which also cause installers’ agendas to get busier.

In this context, the war in Ukraine and consequent energy crisis are like a fly hitting the web of trend in the installation market. Although the impact seems small, the war does have some influence on all those trends. The energy transition is accelerated, causing installers to be busier. That in turn influences impacts other trends, like labour and material shortages, and in that manner the tremor travels the entire web. In any case, installation companies need not worry about a shortage of work any time soon.

For more information on the development of installation companies in six major European markets, we refer you to the Q2 2022 report of USP Marketing Consultancy’s European Mechanical Installation Monitor.

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Despite the war in Ukraine, the European installation market is heating up