24. Mrz 2011

The German Sanitary Industry

Strong Growth

Sanitary industry reports “unexpected turnover dynamic” / Domestic business also stable during the crisis / Recovery abroad / Good signs for 2011 / New bathrooms en vogue / Economic recovery with risks / Strong political presence / Building services engineering in the complete overview

Frankfurt/Bonn – (vds) The sanitary industry can refer back to an “unexpected positive business development” for 2010. At the same time, it is entering this year with “business-like optimism”. As the Vereinigung Deutsche Sanitaerwirtschaft (VDS) reported at the “ISH 2011”, the growth is occurring both in Germany and abroad. However, the further market prospects are not free from risk, meaning that the continuity of economic recovery should not be considered guaranteed in any way.

On the basis of the new evaluations of the ifo institute, presented at the most important industry trade fair in mid-March in Frankfurt, the turnover of the sanitary industry increased by almost 7 % in 2010 to €17.3 billion euro (2009: €16.2 billion euro). Accordingly, the German sales revenue increased by a good 6 % to €14.0 billion euro (after €13.2 billion euro). The umbrella association for industry, wholesalers and the specialised trade also added that even in the crisis year of 2009, the bathroom demand in Germany appeared to be a “stabilising factor”. In terms of foreign trade, there is a turnover increase of about 10 % to €3.3 billion euro for 2010 (after €3.0 billion euro). However, it should also be taken into account that a “dramatic slump” was reported in 2009, especially for manufacturers of sanitary products. Despite the strong recovery, 2010 could not fully compensate for this.

Successful Start

According to ifo, the predominantly small and medium enterprises-structured branch of industry continues to have a somewhat lower upwards dynamic in 2011. Accordingly, the overall turnover showed increased by 4 % to about €18.0 billion euro. While the forecast for Germany is showing an increase of almost 4 % to €14.5 billion euro, the assumption is that the foreign increase will be by approximately 6 % to €3.5 billion euro. If this assumption is true, the business volumes realised beyond the German borders will only reach the level of 2008. In view of this, the VDS managing director Jens J. Wischmann considers it necessary to know how to “interpret the figures properly” in regards to the increase in demand abroad.

In spite of this, the start of 2011 has been steadily successful. According to the ifo business barometer gathered for the sanitary industry, the companies are very satisfied with the current business position. In addition, the index, which increased by about 20 percentage points within a month in February, signalises a “pronounced confidence” for the next half of the year. Among other things, it is based on the current favourable economic conditions. This includes the readiness of German citizens to make larger acquisitions, as confirmed by the latest GfK consumer confidence publication, together with the sentiment of “residential construction as a great white hope”, which has been re-established in the meantime. Wischmann considers bathroom modernisation, in general, to be a sector with “above average growth potential”. Arguments for this include resource-efficient products, guaranteed value and the desire of people to create individuality, regeneration and long-term installation quality.

Focal point of “Demographic Change”

Nevertheless, the risks should not be overlooked; these could have an impact on companies and the private propensity to invest. Among others, the considerable rise in cost of raw materials and energy, the national debt crises and the current problems in North Africa and the Middle East could have an effect here. All these factors make the future economic development “even more difficult to forecast”.

In Germany, Wischmann announced a stronger commitment of the sanitary industry on the political platform. For example, at the “ISH”, it submitted a policy document on the group of topics entitled “Demographic Change – Age-Compatible Apartments – Accessible or Semi-Accessible Bathrooms”. The importance of the sanitary sectors for the population in terms of this “central challenge” was underlined by a representative survey carried out on German citizens aged 18 and above by the forsa institute in mid-2010 on behalf of VDS. When it comes to apartments equipped to satisfy the demands of specific ages, the bathroom clearly tops the ranks with 68 % in the scale of importance. As a result, it leaves the living room (12 %), kitchen (8 %) and bedroom (6 %), among others, far behind. From this, Wischmann deduces the legitimation for a “political offensive”.

Building services engineering industry on course for growth

The new ifo evaluations for the entire building services engineering industry, which includes the sectors of heating, air conditioning and ventilation together with the sanitary division provide a positive picture. Accordingly, the turnover in 2010 recovered by a good 5 % to €40.8 billion euro (after €38.7 billion euro). While a German increase of about 5 % to €33 billion euro could be recorded, foreign business increased by almost 7 % to €7.8 billion euro. In 2011, a total turnover increasing by almost 4 % to over €42 billion euro can be seen. At the same time, the sales revenue is set to increase by 3 % in Germany and approximately 6 % abroad.

According to statements, the number of staff in the building services engineering industry has remained relatively stable over the last few years. Accordingly, over 50 000 companies from industry, wholesale and trade employed almost 410 000 people in 2008, shortly before the outbreak of the crisis. A similar level is expected for 2011.



Upward dynamic: The sanitary branch can refer back to an “unexpected positive development”. On the basis of the new evaluations of the ifo institute, turnover increased by almost 7 %. According to forecasts, the current year should show moderate growth. Although, according to the Vereinigung Deutsche Sanitaerwirtschaft (VDS), the market prospects are not free of risks.
Graphic: Vereinigung Deutsche Sanitaerwirtschaft (VDS) Picture 3062

Jump: According to an estimate of the ifo institute, after a plus of a good 5 %, the total turnover of the house and services engineering industry exceeded 40 billion euro for the first time in 2011. Impulses came both from domestic and foreign markets. The upward trend should continue, according to statements made at the Frankfurt ISH trade fair in the middle of March.
Graphic: Vereinigung Deutsche Sanitaerwirtschaft (VDS) Picture 3063

Continuity: Based on the latest ifo calculations, the number of staff in the building services engineering industry has remained relatively stable over the last few years. The predominantly small and medium enterprises-structured industry had approximately 410 000 employees in 2008. A similar level is expected for 2011.
Graphic: Vereinigung Deutsche Sanitaerwirtschaft (VDS) Picture 3064

Stability: For many years, the total number of building services companies in industry, wholesale and the professional trade has remained stable at over 50 000. This was also true for the crisis period 2008/2009, according to the ifo institute. The slight decrease in 2010 is therefore shown to have been reversed.
Graphic: Vereinigung Deutsche Sanitaerwirtschaft (VDS) Picture 3065





Unexpected Dynamics
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Unexpected Dynamics
New Dimensions
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New Dimensions
Minimal fluctuation
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Minimal fluctuation
Moderate development
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Moderate development