High prices of input materials and rising import penetration have hampered revenue
Los Angeles, CA (PRWEB) July 02, 2012
Following a dismal few years during the recession, the Jewelry Manufacturing industry is anticipated to continue the recovery it began in 2010. Industry revenue is expected to increase 2.4% and total an estimated $8.9 billion during 2012, as consumer spending levels increase with higher disposable incomes and renewed confidence in the economy. IBISWorld industry analyst Josh McBee says demand conditions have been unfavorable in the past five years: The Great Recession caused consumer spending to plummet, especially on luxury items like jewelry. As such, revenue is expected to decline at an annualized rate of 2.9% during the five years to 2012.
High prices of input materials and rising import penetration have also adversely affected industry players over the past five years. During the recession, many investors flocked to gold and silver as safe commodity investments, causing the prices of those metals to spike, says McBee. High input prices have significantly hurt profit margins for the Jewelry Manufacturing industry because already-low demand for jewelry limited the ability of operators to pass on added costs to customers. Additionally, rising manufacturing capabilities in Asia have led to increased jewelry production overseas. Since these countries have lower labor and overhead costs, they offer lower prices on comparable products and erode domestic industry sales. Such rising competition has placed significant pricing pressures on US manufacturers. To maintain demand in the contracting industry, industry players have been forced to further reduce their markup and incur lower profit. With falling margins, industry players have merged, consolidated or exited the industry.
The industry is characterized by a large number of small operators, indicating a low level of industry concentration. Tiffany & Co is the industry’s largest player. US firms have been diverting manufacturing offshore and focusing local operations on distribution and marketing. As a result of this low concentration, the industry is highly price competitive, and local firms compete with low-priced Asian imports. This industry is projected to experience slight growth as economic conditions continue to improve. As consumers regain job security and higher income, demand for jewelry will return to growth. The pricing battle with imports is anticipated to strengthen and limit the industry's growth in the long run. Over the five years to 2017, industry revenue is forecast to decline. For more information, visit IBISWorld’s Jewelry Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry manufacture jewelry or silverware using precious or semi-precious metals and stones. Costume jewelry manufacturers, specialty coin producers and lapidaries (artisans who form stones, minerals and other durable materials into decorative items like cameos and engraved gems) are also included in this 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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