Los Angeles, CA (PRWEB) June 22, 2012
Revenue for the Electrical Equipment Manufacturing industry grew every year since 2007, except 2009, when it fell 24.6% in response to recession-related declines in demand. This significant dip has led to revenue falling at an annualized rate of 3.2% over the five-year period. Revenue is expected to increase 2.6% over 2012, though, earning US manufacturers of electrical equipment $39.3 billion, which includes $25.8 billion from local sales and $13.5 billion from export sales. “The expected rise in revenue is a result of increased consumer spending and increased demand for industry products from downstream construction and manufacturing industries,” says IBISWorld industry analyst Justin Waterman. Industry sales have declined due to a decrease in domestic demand for industry products and a loss of domestic market share to imports; exports have stayed relatively flat, declining, on average, 0.3% per year since 2007. Import penetration has risen in part due to the transfer of some production capacity from the United States to lower-cost countries. While domestic demand for electrical equipment is expected to be worth $51.3 billion in 2012, imports are estimated to satisfy $25.8 billion or 49.8% of this total. Increasing import competition also has led to plant closures and consolidation. Consequently, the number of establishments is expected to decline at an average annual 2.8% to 2,091 in 2012.
Energy issues have also affected the industry. Increasingly, evidence points to the consumption of fossil fuels, which create electricity, as the main cause of the world's changing climate. Looking ahead, environmental concerns will drive demand for solutions that provide secure and energy-efficient electrical equipment, in addition to satisfying the growing demand for electricity. According to Waterman, Higher electricity prices and aging electrical infrastructure will also affect demand for the industry. In the five years to 2017, domestic demand for industry products is forecast to increase. Export growth will return though an increase in import penetration will partly offset this positive activity. Given these conditions, industry revenue is forecast to grow through 2017.
The four largest companies in the Electrical Equipment Manufacturing industry are expected to account for about 29.9% of industry revenue in 2012. Similarly, the US Economic Census indicated that the four largest companies in this industry accounted for 26.4% of the value of industry shipments in 2002. This shows that the market share concentration of the industry is rising, possibly indicating a mature industry life-cycle. Most of the largest players in the Electrical Equipment Manufacturing industry have significant offshore production facilities and their total US sales can exceed the value of shipments from US production facilities. However, there has been consolidation in the North American electric motor sector, with five competitors in 2008 compared with eight competitors in 2000. For more information, visit IBISWorld’s Electrical Equipment Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry primarily manufacture: power, distribution and specialty transformers; electric motors, generators and motor-generator sets; switchgear and switchboard apparatus; relays; and industrial controls. Electrical equipment manufacturers distribute their products to other manufacturing industries as well as to wholesalers and the construction industry.
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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