Rebounds in residential construction and forestry will lead the industry back to growth
Los Angeles, CA (PRWEB) April 26, 2012
The Chipping and Grinding Equipment Manufacturing industry faced adverse conditions during the five years to 2012. The industry manufactures commercial-use equipment that is primarily used to process wood into wood chips, wood shavings and sawdust. These products are mainly used by the forestry sector and recycling facilities to produce wood-based products for paper manufacturing, agricultural purposes, landscaping and energy sources. However, with the downturn in the residential and commercial construction markets, the forestry sector contracted sharply, limiting capital investment in industry machinery. The result was a sharp downturn in industry revenue during the recession. Over the five years to 2012, industry revenue contracted at an average annual rate of 3.4% to an estimated $374.3 million. “With the modest rebound in the forestry sector following the recession and greater demand for paper products, demand for wood chippers and grinders has begun to improve, leading to an estimated 8.9% revenue increase during 2012,” says IBISWorld industry analyst Caitlin Moldvay.
IBISWorld analysis reveals the Chipping and Grinding Equipment Manufacturing industry exhibits a high level of market share concentration. The top companies include Vermeer, Continental and Morbark. Beyond them, the remaining firms are estimated to be small independent companies manufacturing machinery on a local or regional scale. Industry concentration is forecast to increase in line with a falling number of companies. “In addition to ongoing hikes in steel prices that pressure operator margins and force inefficient firms out of business, merger and acquisition activity will likely occur as leading firms seek to expand their geographical reach,” says Moldvay.
Over the five years to 2017, industry revenue is forecast to rebound. The primary factor leading to greater industry demand will be improvement in the forestry sector, which will result in greater capital investment in chippers and grinders used by sawmills, logging companies and timber service providers. Furthermore, the industry will benefit from rising demand for biomass as an alternative energy source. This will boost demand for wood chippers and grinders, which can process pulp wood and discarded wood from landfills. Further regulations requiring utilities companies to increase usage of alternative energy, including biomass, will positively affect demand for the industry's processing equipment. For more information, visit IBISWorld’s Chipping and Grinding Equipment Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures large-scale chippers and grinders for trees, logs and other brush. These large-scale machines are capable of processing one whole tree at a time.
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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