Los Angeles, CA (PRWEB) July 28, 2012
While springs are known for resistance, the recessionary strain on the Wire and Spring Manufacturing industry caused firms to buckle under the pressure. The industry has had to contend with drops in revenue and eroding profit margins. Major and minor players alike have been forced to respond by closing down factories and slashing employment. The recession has caused nearly all industry market segments to experience declines in demand. Over the five years to 2012, revenue is expected to decline at an average rate of 0.3% per year to $10.4 billion. According to IBISWorld industry analyst Nima Samadi, the industry is nevertheless on the rebound, with revenue estimated to have grown 7.9% in 2011 and forecast to increase an additional 5.1% in 2012.
The Wire and Spring Manufacturing industry relies heavily on several key industries to purchase its products. For example, automotive manufacturers use springs in vehicle interiors and for vehicle suspensions. The collapse of the domestic automotive industry throughout 2008 and 2009 caused demand for new cars to plummet, which reduced demand for industry products, says Samadi. However, the auto industry has rebounded strongly from 2010 to the present. Similarly, the meltdown of the construction market resulted in considerably less cash from wire used in concrete-based construction. Furniture and furnishing wholesalers were also affected by the decline in home sales and decreased disposable income, which reduced the number of spring purchases from these industries. However, as demand for wire and spring products recovers over the five years to 2017, industry revenue is projected to grow.
In 2012, the largest industry participants include CRH PLC and Leggett & Platt Inc. The industry’s low concentration reflects the large number of firms operating within the industry and the low barriers to entry for some product segments. In the five years to 2012, IBISWorld estimates that enterprise numbers will have decreased an average 4.4% per year, while establishment numbers will have declined an annualized 3.1%. These decreases have resulted from intense price competition and low profit margins. With these conditions expected to change very little, industry concentration will increase slightly as larger firms attempt to merge and acquire smaller players. The industry also contends with competitive threats from abroad. Over the last 10 years, imports have satisfied an increasing portion of domestic demand. The United States is a net importer of industry products, with net imports expected to have reached nearly $2.9 billion in 2012. Currently, the United States receives about 30.0% of its imports from China. The lower cost of production in China enables operators to manufacture products more cheaply and achieve higher profit margins. As globalization increases, domestic companies will continue to shift manufacturing abroad to obtain lower production costs, and foreign imports will continue to present a threat to the viability of domestic manufacturing. For more information, visit IBISWorld’s Wire and Spring Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry manufacture heavy-gauge and light-gauge springs using steel and drawn wire, as well as manufacturing other wire-based products.
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.