Product innovations have been key drivers of rising consumer demand.
Los Angeles, CA (PRWEB) November 25, 2013
The Communication Equipment Manufacturing industry produces radio and TV broadcasting equipment and other wireless communication equipment, including cell phones. In 2009, the industry had a disappointing performance when revenue declined 23.1% due to plummeting consumer spending. Furthermore, economic uncertainty caused corporations to delay upgrades to wireless and broadcast infrastructure. As a result of the recession's adverse effects on the industry, revenue declined at an estimated average annual rate of 5.5% from 2008 to 2013. However, revenue began to recover in 2011, and this trend is expected to continue, increasing 4.2% in 2013 and reaching $31.4 billion.
Over the past five years, product innovations have been key drivers of rising underlying consumer demand for new services and merchandise, bolstering industry performance. “While domestic companies are often at the forefront of progress in this industry, many domestic operators have been offshoring less profitable and lower-skilled manufacturing activities to countries with relatively lower wages, such as Mexico and China, boosting industry profit,” according to IBISWorld Industry Analyst Sarah Kahn. However, offshoring is also weakening revenue as the persistent rise of imports over the past five years has threatened domestic manufacturers. Consequently, imports are expected to account for 67.2% of domestic demand in 2013, up from 53.8% in 2008.
Since 2008, the economic downturn and rising import competition have led to merger and acquisition activity, where some major players, such as Cisco, acquire small competitors, and companies like Alcatel and Lucent merge to stay afloat in an increasingly competitive global economy. Moreover, a greater number of establishments have led to a broader range of products and larger research and development (R&D) departments. Subsequently, growing R&D departments require employees with higher skill levels and due to this requisite, industry wages are expected to increase at a 5.3% annualized rate, accounting for nearly a quarter of revenue over the five years to 2013.
Moreover, through 2018, revenue is projected to recover. “Domestic demand for industry products is expected to grow but increasing demand from importers may offset growth,” says Kahn. US operators will continue to shift their focus to their services, high-end sectors and R&D development, while outsourcing production abroad and offshoring manufacturing facilities.
For more information, visit IBISWorld’s Communication Equipment Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Communications Equipment Manufacturing industry primarily manufactures broadcasting and other wireless communication equipment. Examples of such equipment include antennas, set-top boxes, GPS systems, cell phones, satellite uplink technologies, and radio and TV broadcasting equipment. Operators in this industry do not manufacture radio and television sets, intercoms or equipment to test communication signals.
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