Hardware Manufacturing in the US Industry Market Research Report Now Available from IBISWorld

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The performance of the Hardware Manufacturing industry depends on activity in the downstream customer industries, such as the construction sector and automotive manufacturing. The recessionary effects that have pummeled these industries have flowed on as reduced demand for related hardware. The movement of the US dollar also influences the industry, with high imports pressuring prices and margins. As the economy recovers, demand will return from downstream customers, but import penetration will weigh heavily on revenue growth. For these reasons, industry research firm IBISWorld has updated its report on the Hardware Manufacturing industry.

IBISWorld Market Research

IBISWorld Market Research

Low-cost imports continue to erode revenue, hurting profit and spurring consolidation

The US Hardware Manufacturing industry is in decline as it faces various problems that primarily stem from international competition. “Despite achieving some revenue gains in 2010 and 2011,” says industry analyst Brian Bueno, “revenue has been on a downward trend for more than a decade.” The trend will continue in 2012 as revenue falls 2.4% to $7.5 billion, marking an annualized decline of 6.3% since 2007. Already facing difficulties, hardware manufacturers suffered major blows between 2007 and 2009 as its major customers in construction, automobile and furniture manufacturing severely cut demand for new hardware. A rebound occurred in 2010 and 2011, but growth is expected to dissipate as customers continue to source their orders from abroad.

The rapidly increasing tide of low-cost imports has continued to erode industry revenue and reinforce a focus on price-based competition. “The sheer level of price-based competition has prevented domestic manufacturers from implementing price increases despite rising production costs,” Bueno says. As a result, domestic firms are exiting the industry and imports are continuously occupying a greater share of domestic demand. Over the five years to 2012, imports are projected to fall at an average annual rate of 1.1% as the recession cut demand for hardware. However, imports have grown from occupying 43.8% of domestic demand in 2007 to an anticipated 52.2% in 2012.

Concentration in the Hardware Manufacturing industry is moderate. The wide variety of product offerings and the existence of niches have allowed firms to specialize in certain product types or markets, thereby allowing for the existence of smaller firms. However, concentration in the industry has been trending upward as many firms have exited the market altogether or are acquired by larger players. The number of enterprises has fallen almost consistently for more than a decade. With the increasing intensity of price competition and falling profit margins, IBISWorld forecasts that industry concentration will continue to increase over the next five years. Larger firms will continue to acquire some of the smaller players to increase market share and become more competitive. Such activity has been observed with Stanley Works over the past few years. The company held aggressive expansionary plans, and acquired a range of companies, culminating in the 2010 merger with Black & Decker.

Many firms are moving operations to countries where operating costs are lower, allowing them to obtain better profit margins. Like revenue, the total number of industry firms has been on a downward trend for more than 10 years. In addition, as firms have attempted to cut costs, employment has fallen at an average annual rate of 9.4% to 24,602 workers over the five years to 2012. The industry will continue to underperform the US economy during the next five years. Increased import penetration across most product segments will weigh heavily upon revenue growth.

For more information, visit IBISWorld’s Hardware Manufacturing in the US industry report page.

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IBISWorld industry Report Key Topics

This industry manufactures various forms of metal hardware. Items produced include metal hinges, metal handles, keys and locks, excluding time locks and coin-operated locks.

Industry Performance
Executive Summary
Key External Drivers
Current Performance
Industry Outlook
Industry Life Cycle
Products & Markets
Supply Chain
Products & Services
Major Markets
Globalization & Trade
Business Locations
Competitive Landscape
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
Major Companies
Operating Conditions
Capital Intensity
Key Statistics
Industry Data
Annual Change
Key Ratios

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.

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Gavin Smith
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