Though demand will grow, operators will lose market share domestically and abroad
Los Angeles, CA (PRWEB) November 21, 2012
The Communication Equipment Manufacturing industry produces radio, TV and mobile phone broadcasting equipment. It began its recovery in 2010 after a disappointing 2009, when revenue declined 17.6% due to plummeting consumer spending and business profit. Further, according to IBISWorld industry analyst Justin Waterman, “corporations delayed upgrades to wireless and broadcast infrastructure due to economic uncertainty.” As a result of the recession's adverse effects on the industry, IBISWorld estimates that revenue has declined at an annualized 0.4% from 2007 to 2012. However, revenue is expected to recover 5.4% in 2012 to total $40.0 billion.
Product innovation, along with increasing demand from consumers for new services and devices, are major drivers of industry revenue. While local companies are often at the forefront of innovation in this industry, many domestic firms have been offshoring manufacturing activities to lower-cost countries, helping to alleviate pressures on profit, which is expected to decline to 13.5% of industry revenue in 2012. “The persistent rise of industry imports during the past five years has threatened domestic operators in the Communication Equipment Manufacturing industry,” says Waterman. The value of imports is expected to grow at an average annual rate of 5.0% to total $56.9 billion in the five years to 2012. Some industry companies have relocated and others will continue to outsource production from the United States to countries where wage and rent costs are relatively lower, such as Mexico and China, further sapping industry revenue.
Since 2007, the economic downturn and rising import competition have led to industry consolidation. Major players, such as Harris Corporation, have acquired small competitors, and large companies like Alcatel and Lucent have merged to stay afloat in the increasingly competitive global economy. In turn, consolidation has not only led to increased market share concentration as smaller companies exited altogether, but also led to improved efficiency. During the five years to 2012, industry employment is expected to decline at a 1.4% annualized rate to 86,396, partially resulting from continued offshoring.
Through 2017, industry revenue is projected to recover at a strong rate. Domestic demand for industry products is forecast to grow at an average rate of 7.8% per year during the same period, but a loss of market share in domestic and export markets will partially offset industry growth. US operators will continue shifting their focus to the service sector, while offshoring in-house operations and outsourcing production to third parties abroad. For more information, visit IBISWorld’s Communication Equipment Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes companies primarily engaged in manufacturing broadcasting and other wireless communications equipment. Examples of such equipment include antennas, set top boxes, GPS systems, cell phones, satellite uplink technologies and radio and TV broadcasting equipment.
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.