Recessionary conditions have hampered infrastructure activity and coal production levels
Los Angeles, CA (PRWEB) October 24, 2012
The US Explosives Manufacturing industry is a relatively small component of the nation's overall chemical sector, comprising roughly 55 enterprises and employing an estimated 5,950 people. Still, says IBISWorld industry analyst Sean Windle, “since the invention of dynamite and the blasting cap, explosives have played an important role in the economic development of the United States.” They have not only helped shape the nation's mining and mineral industries, but also oil and gas exploration, power production, the construction of pipelines, tunnels and motorways and the controlled-demolition of bridges and buildings.
In the five years to 2012, industry revenue is expected to grow at an average annual rate of 1.6% to $2.1 billion. The subdued growth is due to significant losses during the recession, which led to a 12.8% revenue drop in 2010. According to Windle, “In addition, while coal-mining operations make up the largest mining-related market for explosives manufacturers, demand from coal and other mining industries has been volatile over the past five years, thanks to the recession.” Fortunately for the industry, demand from mining and construction markets began to pick up in 2010, in line with the improving economy. One of the biggest victories for explosives manufactures has been strong demand overseas, with exports rising at an average annual rate of 5.2% over the past five years. Consequently, the rise in domestic and foreign demand is expected to bolster revenue 6.8% in 2012. The increase in demand, coupled with lower input prices for raw materials, such as lead, has boosted profitability, with margins increasing from 12.0% of revenue in 2007 to 13.8% in 2012.
The US Explosives Manufacturing industry is deemed to have a high level of concentration, which reflects the dominance of the two major players: Incitec Pivot Limited and Orica Limited, which also lead the explosives industry on a global scale. These two companies are expected to account for the majority of industry revenue in 2012. However, there are also several smaller players that generate a large portion of revenue for this industry.
Over the next five years, the industry will enjoy robust growth, with revenue expected to increase. However, many question marks surround the future of domestic coal mining, the industry's largest mining market. According to the US Energy Information Administration, coal-based electricity produced in the United States has fallen from a little more than 40.0% in 2000 to just more than 30.0% in 2010, and it is expected to continue to decline, as environmental concerns over fossil fuels spur energy providers to transition from coal to natural gas and other clean-energy sources. As the United States gradually transitions away from fossil fuel production, US explosives manufacturers will increasingly rely on foreign markets to generate revenue.
For more information, visit IBISWorld’s Explosives Manufacturing in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
Operators in this industry manufacture explosives, blasting agents and oxidizers. Industry manufacturers may also be involved in the production of blasting accessories, such as blasting and detonating caps, fuses and cords. This industry does not manufacture pyrotechnics, ammunition, ammunition detonators or percussion caps.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
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.