Consumers will upgrade existing fences as home valuations and income levels recover.
Los Angeles, CA (PRWEB) January 27, 2012
The Fence and Scaffolding Manufacturing industry primarily sells its products to specialty contractors across residential, commercial and industrial construction markets. According to IBISWorld industry analyst Kathleen Ripley, “the prolonged and substantial US construction slump of recent years caused demand for industry products to drop sharply, causing revenue to decline at an average annual rate of 6.1% per year to $1.4 billion in the five years to 2012.” As total building construction spending dropped at a rate of 7.1% during the period, contractors reduced their purchases of scaffolding and metal fencing products. Therefore, firms struggled to maintain healthy sales levels. Scaffolding equipment sales were most adversely affected by a drop in construction projects, including new construction and repairs and renovation. Fencing tends to be less volatile as it is used in a range of settings across many markets. Still, layoffs, budget cuts, high unemployment and reduced corporate profit weakened demand for new fencing as consumers and business owners put off upgrades or repairs until economic conditions improved. The recession curbed household spending on discretionary items, such as swimming pools and spas that require fencing.
The industry is characterized by a large number of small operators that work in small or regional markets. Larger, national manufacturers tend to operate manufacturing plants abroad or use third party manufacturers to source a variety of products for the domestic market, diluting their market share concentration. In the five years to 2012, many of these firms struggled to maintain profitability, as volatile input prices of steel and aluminum challenged the industry. According to Ripley, “a number of firms shut down manufacturing plants, closed down, or were acquired as the recession provided opportunities for increased consolidation.”
As the economy begins to recover, industry companies like Safway Services, Ameristar Fence Products, and Universal Scaffolding will face improved revenue and overall performance. This recovery and a slight increase in construction activity, primarily for repairs and renovations, helped the industry begin turning around in 2011. In 2012, continued economic recovery is expected to boost industry revenue by 2.9% to $1.4 billion. In the five years to 2017, recovering home valuations, employment and per capita disposable income will likely continue to drive revenue growth for the industry as consumers demand better quality of fencing products and will be encouraged to upgrade existing fences.
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This industry manufactures metal fencing, gates and scaffolding. The industry includes products made from purchased metal as well as fencing and gates made at plants that draw wire.
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