Mass-produced imports will continue to put pressure on firms' pricing and margins
Los Angeles, CA (PRWEB) October 16, 2012
In line with the economy as a whole, the Power Tools Manufacturing industry has experienced a volatile past five years. Prior to the recession, demand from the industry's main downstream market – the construction sector – was steady. “Following the financial crisis and the collapse of the housing market, however, domestic demand contracted sharply,” says IBISWorld industry analyst Kevin Boyland. “The negative effects on the industry were compounded as deteriorating economic conditions spread to the rest of the world, causing revenue from exports to contract sharply as well.” As demand for power tools from downstream markets has recovered, the industry has climbed back to its position prior to the recession. As a result, revenue is expected to increase marginally over the five years to 2012, growing 0.2% per year on average to $2.7 billion.
The Power Tools Manufacturing industry operates at a trade deficit, with exports accounting for about one-third of revenue and imports satisfying a little more than two-thirds of domestic demand. “A down US dollar boosted export sales following the recession, providing a much-needed revenue stream for operators suffering from depressed demand for power tools,” Boyland says. “As the dollar remains weak relative to many major trading partners, revenue is expected to increase in 2012 as exports increase.” Unfortunately for the industry, the homogenous nature of most power tools allows them to be mass-produced, opening the industry to fierce competition from imports. China, in particular, has proven to be a key source of import competition. Competition from imports has pressured industry margins over the past five years, causing firms to cut costs wherever possible.
Over the five years to 2017, the industry is expected to benefit from more stable activity in downstream construction markets. Buoyed by increased activity in residential and private nonresidential construction sectors, revenue is expected to increase. Still, imports, which satisfy the majority of domestic demand for power tools, are expected to continue to put pressure on firms' pricing and margins. Firms that spend more on research and development to add unique value to their products will have a competitive advantage in the face of persistent competition from generic imports. Current major companies include Stanley Black & Decker Inc. and Snap-on Inc. For more information, visit IBISWorld’s Power Tools Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures power-driven (e.g. battery, corded, pneumatic) hand tools including drills, circular saws, chain saws and nail guns. Operators that manufacture such tools may also sell spare or replacement parts. This industry excludes firms that exclusively sell parts, power-driven heavy construction hand tools (e.g. tampers, jackhammers), powered pumps and vacuums, outdoor powered equipment (e.g. lawnmowers, power washers) and machine tools for woodcutting.
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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Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.