Demand has deteriorated due to declines in investment in the commercial building market
Los Angeles, CA (PRWEB) September 11, 2012
The performance of the Elevator Installation and Service industry is heavily dependent on investment trends in the non-residential building market and on new capital equipment. Activity is evenly spread between elevator and escalator installation and maintenance (building automation) and millwright contracting or machine rigging (particularly work on materials-handling equipment). “In the five years to 2012, demand conditions have deteriorated markedly, stemming from the recession-induced decline in investment in the commercial building market and weaker capital investment in machinery and equipment,” says IBISWorld industry analyst Andrea Alegria. As a result, industry revenue is projected to decline at an average annual rate of 3.2% to $15.1 billion in the five years to 2012.
The decline in demand for the Elevator Installation and Service industry intensified internal competition and put pressure on profit margins. Consequently, average industry profit, as a measure of earnings before interest and taxes, has fallen from a high of 21.6% of revenue in 2007 to an estimated 13.7% in 2012. After significant declines in 2009 and 2010, industry revenue began recovering in 2011. IBISWorld expects industry revenue to grow a further 3.0% in 2012. “The industry has a low level of ownership concentration and comprises many small-scale contractors that operate in narrow geographic or specialized markets,” adds Alegria. “There is a concentration of contractors and larger scale players in the regions with a higher density urban settlement and a greater concentration of manufacturing activity.” The concentration of ownership in the elevator segment of this industry has been slowly increasing since the mid-2000s. A handful of larger companies, including Schindler Elevator Corporation, have invested in acquisition campaigns over the past five years, taking over several regional contractors operating across many markets.
Gradual improvement in the US economy from 2012 to 2017 will likely fuel investment into the non-residential building markets and stimulate demand for the installation and maintenance of automation systems and industrial machinery. Including a 7.6% jump in 2013, industry revenue is forecast to climb at an average rate of 4.1% per year over the next five years to reach $18.5 billion in 2017. Competitive pressures on profit margins are expected to recede starting in 2013 as demand from nearly all the industry's downstream markets experience strong improvement. For more information, visit IBISWorld’s Elevator Installation and Service 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
This industry comprises establishments primarily engaged in one or more of the following activities: the installation or dismantling of building or industrial equipment (except plumbing, air conditioning or electrical equipment); machine rigging; and millwriting. Types of equipment installed include automated and revolving doors, conveyor systems, dumbwaiters, dust-collecting equipment, elevators, small incinerators, pneumatic tubes systems and built-in vacuum-cleaning systems.
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.