Lower defense spending and declining interest in hunting will limit industry growth
Los Angeles, CA (PRWEB) April 23, 2012
During the past five years, the Telescopic Gunsight Manufacturing industry has fallen prey to waning American interest in hunting and tightening state and local law enforcement budgets. The industry was aided by rising federal defense spending and a peaking economy in the mid-2000s. However, conditions quickly turned negative as the US economy entered recession and rising military demand failed to offset weak consumer spending on recreational goods. According to industry analyst Brian Bueno, “following the recession, demand has worsened as defense and law enforcement markets have faced budget cuts.” In 2012, industry revenue is expected to decline 2.4% to $1.28 billion. Due to stronger performance in previous years, revenue is anticipated to increase at a weak annualized rate of 0.7% over the five years to 2012.
The major market for the industry continues to be consumers. Consumers are expected to purchase about $643.6 million worth of telescopic gunsights (i.e. scopes) in 2012, accounting for about 50.2% of industry revenue. According to Bueno, “this share has declined during the past five years as the recession pinched consumer wallets, bringing down disposable incomes and forcing many to cut back on recreational purchases.” Furthermore, American interest in hunting has declined for more than a decade, hurting sales of hunting-specific arms and accessories. According to a national survey by the Fish and Wildlife Service, an estimated 12.5 million Americans aged 16 and older hunted in 2006, down from 13.0 million in 2001. The decline in the number of hunters has persisted during the five years to 2012, due to continued rural migration to metropolitan areas and decreasing interest in hunting by the general public. IBISWorld estimates that about 4.7% of Americans aged 16 or older will hunt in 2012.
The Telescopic Gunsight Manufacturing industry will continue to have a low level of market share concentration in the next five years, with major companies Trijicon and Bushnell Corporation likely experiencing stable growth. Because of greater federal budget deficit concerns and the withdrawal of troops from the Middle East, government spending on defense is expected to contract over the next five years. The Pentagon is currently facing cuts of $486.0 billion during the next decade, which will shrink ground forces and slow defense purchases. Consequently, demand for military-grade gunsights is anticipated to decline. However, the decline will be mitigated by the need to replace older and nearly obsolete arms and equipment. Technologies will likely advance along with rising demand from local and state governments. As a result, during the five years to 2017, revenue is projected to decline at a marginal average rate.
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This industry manufactures telescopic sights (i.e. scopes) for mounting onto firearms.
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