Demand fell sharply during the recession as industrial production stumbled.
Los Angeles, CA (PRWEB) October 04, 2013
The US recession highlighted the strong interdependence between the Industrial and Fluid Power Valve Manufacturing industry and the health of industrial production industries. The recession's impact became clear in late 2008 and especially in 2009, when revenue and demand suddenly fell. Because of this period of poor performance, industry revenue is estimated to have declined at an annualized rate of 2.2% during the five years to 2013. Conditions rebounded in 2011 and 2012, and in 2013, revenue is expected to grow 2.6% to $20.0 billion.
Operators in the Industrial & Fluid Power Valve Manufacturing industry rely on several key industries to buy their products, including industrial production industries; chemical and petrochemical industries; and water and waste systems industries. According to IBISWorld Industry Analyst Olawale Harrison, “As the recession spread throughout the economy, the industrial production index plunged in 2009 with the largest single-year drop in several decades.” This was one of the largest contributors to the severe decline in revenue experienced by domestic valve manufacturers in 2009, though industrial production slowly improved thereafter. Chemical and petrochemical manufacturers also faced declining demand during the recession due to increased import competition and lower demand from downstream industries; however, conditions have improved from 2010 to the present. Despite recession-related declines, some market segments have performed well throughout the recession. Stimulus funds and demand from the maintenance and repair of existing piping allowed the water and wastewater systems segment to grow. Also, with oil prices creeping upward again in 2012, demand from petroleum customers spiked.
“Many industrial and fluid power valves have become standardized, causing pricing to become the primary basis of competition,” says Harrison. This development favors foreign manufacturers; as a result, imported goods satisfy an increasing amount of the domestic market. Industry imports are expected to have grown at an average annual rate of 7.0% in the five years to 2013. As globalization increases, foreign imports will threaten the viability of domestic manufacturing. As downstream industries recover from the recession, demand is set to increase and subsequently, revenue will grow in the next five years. Domestic manufacturing growth will also be driven by rising demand for computer-controlled and -integrated valves and greater demand for fluid power valves from the aerospace sector.
The Industrial and Fluid Power Valve Manufacturing industry consists of a large number of small firms. Over the past five years, many small and medium-size firms have exited the industry, while some larger players have engaged in major merger and acquisition activity. Larger firms also continue to grow by increasing their presence in global markets, which helps mitigate revenue downturns generated by the deterioration of domestic markets.
For more information, visit IBISWorld’s Industrial & Fluid Power Valve Manufacturing in the US in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in this industry manufacture industrial and fluid-power valves, assemblies, couplings and fittings. Primary end-users of industrial valves include water works and municipal water systems. Plumbing fixtures, trim and other miscellaneous metal valves and pipe fittings (e.g. water traps, elbows, nozzles and unions) are excluded.
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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