Industrial production and construction markets will improve, supporting industry growth
Los Angeles, CA (PRWEB) March 19, 2012
Industrial furnaces are used for a variety of processes by downstream industries, such as smelting and refining. They are also used for steel casting and the production of other products, including glass and chemicals. Unfortunately for operators, the industry's reliance on the manufacturing and construction sectors caused a significant downturn when the economy entered the recession. The industrial production index (IPI), which measures the output from mining, manufacturing, electric and gas industries, fell 11.1% in 2009. According to IBISWorld industry analyst Kevin Culbert, “The reduction in industrial output diminished demand for industry furnaces, as manufacturers deferred previously planned expenditures on machinery and equipment.” Furthermore, the industry suffered from client's limited access to credit, which contributed to a reduction in industrial equipment investment. As such, IBISWorld estimates that revenue for the Industrial Process Furnace Manufacturing industry will decline at an average 1.3% annually to $2.3 billion in the five years to 2012.
Industrial process furnaces are also used for construction-related inputs, including steel beams, which are used in non-residential construction. So in addition to poor performance across the manufacturing sector, the construction sector also experienced a significant decline, with the value of private non-residential construction falling 21.3% during 2009. This factor, coupled with problems in the manufacturing sector, caused industry revenue to plummet 23.5% in 2009. In the five years to 2012, the value of private non-residential construction has declined 5.5% annually, contributing to an overall revenue decline during the past five years. “As demand weakened during the recession, industry profitability came under pressure and forced some operators out of business,” Culbert says. As a result, the number of Industrial Process Furnace Manufacturing industry firms is expected to decline at an average of 1.0% annually to 257 over the five-year period, a trend that has occurred over the past decade. Remaining players have strived to make strategic acquisitions to achieve economies of scale and increase market share. Additionally, few new businesses have opened during the past five years; however, IBISWorld anticipates that existing firms have resumed expanding their business networks as new markets in Mexico and South America have opened up and demand for replacement furnaces has increased.
Fortunately for industry operators, which include major companies like Siemens AG, Illinois Work Tools and Ipsen Inc., the IPI and value of private non-residential construction are expected to rise in 2012 and beyond. As a result, IBISWorld estimates that revenue will increase during the year. Continuing improvement in downstream markets is forecast to cause industry revenue to rise over the five years to 2017. For more information, visit IBISWorld’s Industrial Process Furnace Manufacturing report in the US industry page.
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IBISWorld industry Report Key Topics
This industry manufactures industrial process furnaces and ovens. These products provide heat for industrial processes or serve as reactors for chemical reactions, by applying high heat during the reaction.
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.