Luckily for industry operators, the key drivers of demand have started to turn around, and demand is beginning to increase
Los Angeles, CA (PRWEB) January 16, 2012
IBISWorld estimates that revenue for the Wood Varnish Manufacturing industry will fall at an annualized rate of 1.1% to $3.3 billion in the five years to 2012. According to industry analyst Nikoleta Panteva “industry sales largely depend on demand from the construction sector, home improvement stores and wood product manufacturers. Unfortunately for the industry, demand was greatly diminished by the recession, which caused a drastic decline in home and office construction. Luckily for industry operators, the key drivers of demand have started to turn around, and demand is beginning to increase. In 2012, increased spending on home improvements and growth in the residential construction market are expected to boost industry revenue by 4.9%.” Revenue for the Wood Varnish Manufacturing industry is forecast to continue growing in the next five years. Stronger demand from the manufacturing and construction sectors will drive sales of wood varnish.
However, profit margins are projected to remain tight due to rising raw material costs. Rising crude oil prices have caused the price of resin to increase at an annualized rate of 3.9% during the past five years. Panteva adds that “while firms have passed a portion of these costs onto downstream clients, rising purchase costs have still eaten into profit margins.” IBISWorld estimates that margins have declined to 8.4% in 2012, down from 9.6% in 2007. Reduced profit has caused some industry consolidation, with the number of firms falling at an average of 4.2% annually to 109 in the five years to 2012.
Market share concentration within the Wood Varnish Manufacturing industry is medium. Combined, the top four players account for around 43% of industry revenue. Major players’ sales have generally increased faster than revenue, resulting in greater market shares for bigger entitles. Major players include PPG Industries, Sherwin-Williams and Masco Corporation. Other companies with notable market share include RPM Industries and Valspar. These companies have well-recognized brand names, which has helped them sustain revenue growth and increase their industry presence. Consolidation within the industry has also led to increased market shares for the major players. As weak manufacturers exit the industry, large operators have been able to satisfy leftover demand.
For more information visit IBISWorld’s Wood Varnish Manufacturing industry report
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This industry manufactures protective coatings for wood finishings that are then used for consumer and commercial purposes.
IBISWorld industry Report Key Topics
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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