Excess production capacity is driving gypsum product prices down, hurting firms' revenue
Los Angeles, CA (PRWEB) October 01, 2012
The Great Recession took a heavy toll on nearly all of the Gypsum Product Manufacturing industry's downstream markets. While demand from residential building was the first to stall following the subprime mortgage crisis, non-residential building activity eventually slumped too, as access to credit dried up and a lack of consumer spending discouraged retailers and manufacturers from expanding. Likewise, consumers delayed or canceled remodeling projects for their homes until they felt economic relief. According to IBISWorld industry analyst Sean Windle, exports have provided a bright spot during the past five years, save for a recession-related dip in 2009. Still, their contribution to revenue remains minimal given the low value-to-weight ratio of the industry's primary products: wallboard and similar cladding for walls and ceilings.
As a result of reduced activity in downstream building markets, the volume of wallboard sold has declined in significantly over the past five years. At the same time, a significant amount of excess production capacity in the United States continues to drive prices down and further hinder the industry's performance. In addition to delayed or canceled construction projects that have mired drywall installers since 2007, the prices received for what wallboard has been sold have been lower than usual. “In light of these adverse conditions, industry revenue is expected to decline at an average rate of 9.0% per year during the five years to 2012,” says Windle. Fortunately for the industry, downstream construction sectors have begun to recover. In response to renewed downstream construction activity (particularly in new home construction), industry revenue is expected to rise 13.6% during 2012 to $3.6 billion. Ongoing gains in export volumes will further bolster revenue. Through 2017, forecast improvements in downstream construction markets are projected to increase industry revenue through 2017.
The Gypsum Product Manufacturing industry has a high degree of ownership concentration, with the four largest players accounting for over 80.0% of industry revenue in 2012. The leading companies have operations spread across key regional markets, while the remaining companies are small- to medium-scale firms employing fewer than 10 people. Industry concentration has increased during the past five years, as less profitable companies exited the industry during the recession and larger players expanded their market shares through mergers and acquisitions. The four largest players are USG Corporation, New NGC Inc., Koch Industries Inc. and Compagnie de Saint-Gobain. For more information, visit IBISWorld’s Gypsum Product Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry manufacture gypsum products, such as wallboard, plaster, plasterboard, molding, ornamental moldings, statuary and architectural plasterwork. Gypsum product manufacturers may mine, quarry or purchase gypsum for use in the manufacture of their goods.
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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