Companies maintained testing regimes during the recession, though R&D spending dropped
Los Angeles, CA (PRWEB) August 23, 2012
The Laboratory Testing Services industry is composed of companies that help businesses and manufacturers perform tests on items ranging from consumer and food products to industrial materials. In an increasingly regulated society, pressure on companies and manufacturers to ensure the safety and quality of their products is higher than ever. A greater number of government safety regulations and consumer lawsuits have led to increasingly rigorous testing of manufacturers' goods prior to sale, says IBISWorld industry analyst Anna Son. As a result, the industry is expected to grow at an average annual rate of 2.9% to $15.7 billion in the five years to 2012. Laboratory testing services have thrived because of increased government regulation on consumer and food products, leading to an expected 5.6% revenue increase in 2012 alone. Testing laboratories have an advantage during economic downturns because many clients will not abandon testing regimes, preferring to cut costs in other ways. Regardless of economic conditions, government regulations still require manufacturers to test their existing products to make sure they comply with federal law. However, as company research and development (R&D) spending decreased during the recession, the industry's 2008 growth rate slowed. With fewer products introduced to the market, demand for laboratories to test new goods slowed.
The Laboratory Testing Services industry exhibits a low level of market share concentration. Even though there are some large laboratories that dominate the industry, smaller operators that specialize in a specific industry or particular service represent the vast majority of testing laboratories in the United States, says Son. During the past five years, the industry has experienced an increase in market share concentration due to consolidation trends among industry operators. As larger players acquire smaller firms, they are able to expand their products and services to new markets and work with a larger number of industries.
Over the five years to 2017, the industry is projected to grow at a faster rate as companies accommodate stricter environmental regulations and invest in new products, which will increase companies' R&D expenses. The industry revenue is forecast to grow over the next five years. An expected increase in government regulation of consumer products and greater pressure on producers to have high-quality goods will ensure continued growth. In addition, more stringent environmental legislation and growing demand for environmentally friendly technologies are expected to drive industry growth. At the same time, the industry will continue consolidating because larger testing laboratories that service a wider range of sectors are generally more profitable. For more information, visit IBISWorld’s Laboratory Testing Services in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in the industry perform physical, chemical and other analytical testing for commercial purposes. The testing may occur in a laboratory or on-site (i.e. where the product is manufactured or developed). Most results from industry-led tests are checked against government regulations and environmental, industrial and product standards. This industry excludes medical and veterinary testing labs.
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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