High costs and fierce import competition are threatening industry operators
Melbourne, Australia (PRWEB) October 23, 2012
The Household Appliance Manufacturing industry in Australia has struggled to compete in a market increasingly dominated by imported goods. Low-cost producers across Asia and poor demand for goods in general precipitated by the global financial crisis have affected industry performance significantly. Revenue is expected to decline by an annualised 7.6% over the five years through 2012-13 as local manufacturers move operations offshore to save costs in wages and therefore achieve greater profit margins. According to IBISWorld industry analyst Jeremy Edwards, “Falling consumer sentiment due to the financial crisis caused key downstream retail industries to suffer falling demand and lower construction rates, resulting in lower levels of hot water system installation”. Revenue is forecast to fall by in 2012-13, to $2.02 billion. Declining revenue and industry gross product have resulted in enterprises leaving the industry as profit has fallen and overseas manufacturing becomes more attractive.
The outlook for the Household Appliance Manufacturing industry in Australia is better, though revenue is expected to continue to decline. The Australian dollar is forecast to remain high over the majority of the next five years and import competition is likely to intensify. “Retail recovery is expected, though the industry is unlikely to feel the full effects as import competition captures a greater amount of increased demand,” Edwards adds. Australian manufacturers are likely to shift towards designing and manufacturing more advanced technologies, as skilled labour is readily available and price remains a basis of competition that Australia cannot compete on. Over the five years through 2017-18, revenue is forecast to decline. The decline is significantly smaller than in previous years due to most major players in whitegoods having left the industry already, and due to general economic conditions stabilising. Enterprise numbers are expected to decrease at a higher rate, however, as profit margins remain low and major companies pursue consolidation to gain economies of scale.
The Household Appliance Manufacturing industry is characterised by a moderate level of market share concentration. Electrolux Home Products is the largest player in the industry, followed by Rheem Australia and GWA Group. There are a large number of manufacturers in the industry as it covers a large range of products. As the industry is in a stage of decline, there has been an increased amount of consolidation, which is expected to continue. Manufacturers in the industry benefit from economies of scale and are better able to invest in capital for greater efficiency with larger factories and assembly lines. High barriers to entry and exit in the industry have prevented an even larger exodus of players during the past five years, as profit margins have fallen considerably.
For more information, visit IBISWorld’s Household Appliance Manufacturing report in Australia industry page.
Follow IBISWorld on Twitter: http://twitter.com/#!/ibisworldau
IBISWorld industry Report Key Topics
Companies in this industry manufacture refrigerators (including commercial refrigeration equipment); industrial, commercial or household water-heating systems; bath heaters; sink heaters; urns; household appliances; or room air conditioners.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised 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 Australian 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 Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.