Improved spending will support growth, but low-cost imports will hamper demand
Los Angeles, CA (PRWEB) August 07, 2012
The Power Conversion Equipment Manufacturing industry has been both dipping and recovering over the past five years. Still, revenue is expected to decrease at an average annual rate of 4.6% over the period to $10.67 billion by year-end 2012. “Part of that decline is due to the annual drop in exports that US manufacturers have suffered,” says IBISWorld industry analyst Justin Waterman. “Exports have been hit hard by the global economic downturn and a rising competitiveness of manufacturers located in low-cost countries overseas, such as China.” Although exports as a share of revenue have been falling over the past five years, they are expected to account for a much larger share of industry revenue in 2017. This improvement is indicative of increasing global interdependence, especially with fast-developing nations such as China. As a result of strong export, construction and consumer spending growth, industry revenue is forecast to grow in 2012 and 2013.
While exports have fallen, imports have risen over the past five years. Heated competition among industry participants prompted some to outsource or offshore manufacturing capacity, causing imports to rise. Further, an economic environment unfavorable to downstream retailers forced some to seek out the cheapest goods available. “Power conversion equipment produced abroad is often cheaper than domestically manufactured goods because of cost savings associated with lower labor costs and lax regulation,” says Waterman. “Accordingly, imports are expected to satisfy a much greater share of domestic demand in 2012 than in 2007.” Power Conversion Equipment Manufacturing industry concentration has increased between 2007 and 2012 due to some major acquisitions and growth in segments where US companies are major global players, such as Varian in the linear accelerator market. Concentration, which varies by segment, is low in this industry overall, due in part to its large range of products and specialization.
Over the next five years, industry activity will likely be supported by an increase in domestic demand. Improving economic conditions will stimulate growth in domestic demand for industry products. Some production capacity will be relocated to or established in countries where production costs are low, which will dampen growth in exports and support growth in imports for the industry. Consequently, the number of industry establishments is forecast to fall over the next five years. For more information, visit IBISWorld’s Power Conversion Equipment Manufacturing in the US industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
The Power Conversion Equipment Manufacturing industry comprises firms that manufacture carbon and graphite products, laser systems and electrical power conversion equipment. Products excluded from this industry include electric lighting equipment, household-type appliances, transformers, motors, generators, switchgear, relays, industrial controls, batteries, and communication, energy and cable wiring devices.
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.