Los Angeles, CA (PRWEB) September 25, 2012
The Major Household Appliance Manufacturing industry felt the pressure in the five years to 2012 due to the effects of the changing real estate market. According to IBISWorld industry analyst Doug Kelly, “Like most producers of household goods, major appliance manufacturers saw demand grow during the real estate surge through 2006 and then watched it decline when the housing market weakened.” When consumers move into new homes, they generally purchase new appliances. Therefore, activity in the residential real estate market directly affects major household appliance manufacturers. As a result of the subprime crisis and housing market collapse, industry revenue has declined at an estimated average annual rate of 6.3% to $15.2 billion in the five years to 2012.
In addition to the unstable real estate market, appliance manufacturers have weathered rising input costs and changing government regulations – particularly, new energy-efficiency standards for some major appliances, including dishwashers and washing machines. “To adapt to these changes,” says Kelly, “firms introduced new products and moved many manufacturing facilities abroad to leverage lower-cost labor.” Profit margins are expected to strengthen as a result of lower production costs, but they will be slightly offset by fewer government tax credits for energy-efficient appliances.
Industry concentration measures the extent to which major players dominate an industry. Concentration in the Major Household Appliance Manufacturing industry is expected to be high, with the top four major players accounting for most of the industry's revenue. Whirlpool dominates the markets with the largest market share. Whirlpool's dominance has come through providing a large range of products at many different price points and by acquiring competitors. Market concentration has been increasing over the past five years. During the economic recession, many firms left the industry because they were unable to weather the rapid revenue decline. Larger players gained market share as the smaller companies exited the industry. From 2012 to 2017, the industry is expected to become less concentrated. As the industry rebounds and new products are introduced to spur growth, new companies will enter the industry.
As disposable income increases and consumers who refrained from purchasing expensive items start spending again in 2012, industry revenue growth is expected to get out of the red and increase 1.1%. In the next five years, the recovering housing market will increase demand for new appliances. The growing popularity of smart appliances will also help boost sales. As a result, industry revenue is projected to grow at a higher average than during the past five years. Major revenue declines forced industry exits in the five years to 2012, but companies are expected to rejoin the industry as it slowly recovers.
For more information, visit IBISWorld’s Major Household Appliance Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes firms primarily engaged in manufacturing household cooking appliances, laundry equipment, refrigerators, upright and chest freezers, dishwashers, water heaters, garbage disposal units and other electrical and nonelectrical major household appliances. This industry does not include central or room air conditioners.
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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