As consumers resume spending on home improvement projects, revenue will recover.
Los Angeles, CA (PRWEB) February 09, 2012
The US construction slump set back the Roofing, Siding and Insulation Wholesaling industry over the past five years. According to IBISWorld industry analyst Andrea Alegria, “As the volume of construction projects in both residential and commercial markets shrunk, demand for roofing, siding and insulation products dropped, causing revenue to decline at an average annual rate of 4.4% to $21.3 billion in 2012.”
This industry primarily sells products to builders and developers, who use them for new construction of housing and commercial buildings and for repairs and renovations. Alegria adds, “As a result of the reduced housing construction activity of the past five years, contractors reduced the volume of roofing, siding and insulation products typically ordered from industry wholesalers.” The same was true for contractors that specialize in new construction of office, retail, hospitality and other commercial buildings because the total value of private non-residential construction declined sharply during the period.
Low levels of consumer confidence, high unemployment and declining per capita disposable income also hurt demand for industry products used for home improvements. Nonetheless, reroofing projects are less likely to be postponed than other construction projects during periods of recession or slow economic growth, which helped industry sales during the downturn. Roofing products for repairs of existing buildings accounted for the majority of revenue in the five years to 2012. Storms, such as hurricanes and tornadoes, also helped steady the stream of demand for these products.
In response to the recovery in downstream construction activity, particularly in regard to new-home construction, revenue for the Roofing, Siding and Insulation Wholesaling industry is expected to rise. In the five years to 2017, domestic housing starts are expected to increase, and demand for industry products is also set to get a boost from downstream retailers as consumer spending on home improvements rises with per capita disposable income. Sustained growth in most downstream building markets will boost demand for industry products. Industry enterprise figures are forecast to remain relatively stagnant over the period as operators continue to make acquisitions, increasing the industry's concentration of ownership. However, employment numbers are projected to increase.
The industry has a low concentration of ownership. The three largest players include American Builders & Contractors Supply Co., Beacon Roofing Supply Inc., CRH PLC. The low degree of concentration implies a high level of price competition and low profit margins on the industry's products.
The industry has a highly fragmented structure and comprises many small-scale establishments servicing narrow regional markets. The fragmented structure of this industry is evident from the distribution of establishments by employment size in the annual survey of County Business Patterns. The larger-scale players tend to be multiestablishment companies with wholesale and distribution operations in each key regional market.
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IBISWorld Industry Report Key Topics
This industry comprises establishments that wholesale nonwood roofing and nonwood siding and insulation materials. Sales are typically direct to building contractors, large retail hardware chains and small independent hardware stores.
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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