Reduced public and private investment in new correctional facilities hurt industry demand
Los Angeles, CA (PRWEB) December 20, 2012
The Prison and Jail Construction industry has performed erratically over the five years to 2012, with revenue contracting at an average annual rate of 3.2%. “Although the recession reduced the level of public and private investment for new correctional facilities, the need for more bed space remained as incarceration rates rose,” says IBISWorld analyst Deonta Smith. The most densely populated areas, such as California and Texas, are home to the greatest demand for newly constructed facilities, in turn aiding industry demand. Despite revenue losses during the past five years, there was a considerable growth in remodeling projects. As the economy recovers, the Prison and Jail Construction industry is set to rebound in 2012, prompting an estimated 1.9% jump in revenue to $2.4 billion.
Beginning in 2009, revenue volatility became a concern for industry players; many participants sought to consolidate operations to become more stable and achieve greater economies of scale. Consolidation pushed down the number of branches at an average annual rate of 3.5% in the five years to 2012. Simultaneously, “a number of firms exited the industry, amid decreasing demand for construction projects and a reduction in government and private investment,” says Smith. As such, the total number of enterprises in the Prison and Jail Construction industry is expected to decrease at an average annual rate of 3.6% to 271 over the five-year period.
The next five years are set to be bright for the industry. Higher levels of government and private investment will benefit the industry by pushing for more new facilities and expansions to existing ones. This trend is expected to boost the overall market for prison and jail construction and help stabilize revenue volatility. Subsequently, market share concentration will likely decrease in the next five years as new companies are enticed by the industry's improved demand. Since 2007, industry concentration has increased slightly. While government funding patterns have remained relatively constant, the poor overall economy caused smaller firms to exit the industry. Consequently, industry concentration has increased. In general, the Prison and Jail Construction industry has a low level of concentration. This low level is due to the fact that government construction projects are often intended to create jobs in the local economy. As a result, prison contracts are often awarded to local contractors, contributing to a fragmented industry. Even major players like Hensel Phelps Construction Company focus on regional markets. Other major players include The Turner Corporation and Gilbane Inc. For more information, visit IBISWorld’s Prison and Jail Construction in the US industry report page.
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IBISWorld industry Report Key Topics
This industry constructs prisons, correctional facilities and related structures, with firms specifically engaging in new work, additions and alterations.
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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