Customers stalled purchases during the recession, causing revenue to tumble
Los Angeles, CA (PRWEB) February 29, 2012
The Injection Molding Machinery Manufacturing industry buckled under the pressure of the recession, and industry revenue is expected to decrease at an average annual rate of 2.5% to $606.8 million in the five years to 2012, including a 1.1% decline from 2011 to 2012. The Great Recession resulted in a drop in consumers' disposable income, as well as a fall in demand for the products of industry customers (such products include consumer goods, automobiles and medical devices), which led to fewer purchases of injection molding machinery. According to IBISWorld industry analyst Justin Molavi, businesses also pulled back on machinery investments in response to unfavorable economic conditions during the period, instead choosing to wait on the sidelines for the economy to improve. Volatile steel prices further hurt the industry; such input costs ate into profit margins as industry players were unable to pass along cost increases to customers.
Many industry firms turned to export markets to combat domestic revenue and profit declines. Exports, as a percentage of revenue, jumped to 88.6% in 2009 from 78.8% in 2008, as domestic firms increasingly exported their machines to economies that were relatively better off than the US economy. Although this strategy helped many players, it was not enough to combat the revenue declines the industry experienced as a whole. Many customers held on to their machinery for fear of worse economic conditions and chose to repair machines that were not working properly rather than purchase new ones. Some firms in the Injection Molding Machinery Manufacturing industry fared better than others during the downturn. The market shares of the two largest industry players, Husky and Milacron, combine to account for over half of total industry revenue. These players were able to stay afloat by bringing innovation to the market and introducing new products.
The next five years are set to be brighter for the industry. The US economy will gain strength, leading to higher demand for plastic products and ultimately resulting in heightened machinery orders as businesses try and keep pace with demand. Businesses will increasingly invest in machinery amid a more favorable economic outlook and higher demand for goods from their customers. According to Molavi, "Steel prices are also expected to be less volatile, allowing players to expand margins over the next five years." Nonetheless, the industry is not anticipated to completely recover until 2016, when revenue levels will be higher than those experienced before the recession, in 2007. For more information, visit IBISWorld’s Injection Molding Machinery Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
This industry manufactures injection molding machinery, which makes products through the process of heating a molding material to a fluid state and injecting it into a mold. This industry does not include rubber-working machinery and 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
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