The recession severely decreased downstream demand, cutting into revenue and profit
Los Angeles, CA (PRWEB) September 18, 2012
The Extruding Machinery Manufacturing industry declined over the past five years, with industry revenue is expected to decrease at an average annual rate of 4.4% to total $603.7 in 2012, including a 2.5% decline from 2011 to 2012. The recession resulted in a drop in consumers' disposable income, as well as a fall in demand for the products of industry customers (such products include consumer goods, automobiles and medical devices), which led to fewer purchases of extruding machinery. Businesses also pulled back on machinery investments in response to unfavorable economic conditions during the period, instead choosing to wait on the sidelines for the economy to improve. “Volatile steel prices further hurt the industry; such input costs ate into profit margins, as industry players were not able to pass along cost increases to customers,” says IBISWorld industry analyst Nima Samadi. Many industry firms turned to export markets to combat domestic revenue and profit declines. Exports, as a percentage of revenue, jumped from 28.6% in 2007 to 35.1% in 2012, as domestic firms increasingly exported their machines to economies that were relatively better off than the US economy. Although this strategy helped many players, it was not enough to combat the revenue declines the industry experienced as a whole. Many customers held on to their machinery for fear of worse economic conditions, and chose to repair machines that were not working properly rather than purchase new ones.
The next five years are expected to be brighter for the industry. The US economy will gain strength, leading to higher demand for plastic products and ultimately resulting in heightened machinery orders as businesses try to keep pace with demand. Businesses will increasingly invest in machinery amid a more favorable economic outlook and higher demand for goods from their customers. Steel prices are also expected to be less volatile, allowing players to expand margins over the next five years. Nonetheless, the industry is not anticipated to completely recover until past 2017. As a result of these trends, industry revenue is expected to increase in the five years to 2017.
The Extruding Machinery Manufacturing industry has a low level of concentration. In 2012, the top four companies are estimated to account for about 24.0% of industry revenue. According to Samadi, the industry serves a diverse range of downstream markets with different needs, and industry firms typically specialize in extruding machinery that caters to a specific market. American Extrusion International, for example, specializes solely in extruding machinery used in the food production sector. Many industry firms provide specialized extruding equipment to a small number of customers. Nevertheless, many of the industry's largest players have expanded their operations and operate on an international level. As these firms continue to expand their operations throughout the United States, market share concentration is expected to increase over the next five years. For more information, visit IBISWorld’s Extruding Machinery Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures extrusion machinery, which is used to create objects of a fixed cross-sectional profile. This machinery makes products by pushing or drawing material through a die of the desired cross-section.
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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