A recent study on the North American Intelligent Building Controls (IBC) market shows that market penetration for building controls is only half that of Germany’s and has the potential to double in size despite sales of $1.3 billion in 1998.

The Proplan Division of i&i Ltd., a United Kingdom research and consulting company, recently published a report titled “Intelligent Controls in Buildings — The North American Market 1998-2003.” The report shows that North America has spent the most on new construction, installed more hvac equipment, and averages the highest number of heating and cooling days.

Despite that, the 35% growth rate of building controls lags behind Europe’s 50% growth.

According to i&i’s Allan McHale, the report was supported by leading manufacturers from across the globe.

“Five of the top suppliers in North America participated fully [in the study] by providing information on their activities,” he said. “All of these companies are also regular clients on our European and Asian studies. With support from tier two and three manufacturer suppliers, we had detailed figures which constituted over 70% of the sales to this [North American] market.”

Under penetration

The report showed the main reasons for under penetration were lower specifications and contributions from small- and medium-sized buildings. This is due to the small proportions of controls distributed through controls contractors.

The report is skeptical that suppliers will tackle the challenge despite a guaranteed growth potential for the next two years. Despite assistance through legislation and a growing awareness of “green” issues (IAQ, energy conservation), the untapped potential will only trickle into the marketplace.

The report also cited the changing focus of IBC manufacturers, noting their gradual change from vertical to horizontal structures. The need to strengthen from within comes at a time of price pressures and intense competition. One example given of the need to strengthen involves a recent major merger.

“The drive to reduce cost in the present environment of falling prices has triggered the merger between Honeywell and Allied Signal,” the report said.

“Honeywell has thrown down the gauntlet to pursue an aggressive consolidation policy, and we can expect major changes in the supply side structure within the next six months.”

The report concludes that the IBC market offers the best opportunity in the developed world for growth over the next five years and it clearly must be a “priority” market for all aspiring suppliers.

McHale said the report comes after a lengthy study by i&i and is backed by his company’s knowledge of the industry.

“We like to think that our experience in carrying out similar studies in virtually all countries of the developed world allowed us to bring a new insight [to the market],” he said.

“The report has also benefited from the fact that having no preconceptions of the American market, we have assessed it without bias.”

For more information on the report, visit the i&i Web site at www.iandi.ltd.uk.