Profit suffered as firms lowered their service prices in an effort to sustain waning demand
Los Angeles, CA (PRWEB) November 24, 2013
Industrial designers are hired by manufacturing companies to develop product designs that improve functionality, longevity and production efficiency. Automobile, electronics and other consumer products companies, which are major users of industrial designers, were hit hard during the recession as consumers reduced spending on durable goods. When their revenue and profit plummeted, downstream manufacturers cut their research and development (R&D) budgets, lowering demand for industrial designers in charge of developing new products. Since demand from most downstream markets weakened during the economic downturn, revenue for the Industrial Designers industry is expected to decline marginally at an annualized rate of 0.9% to $6.2 billion in the five years to 2013.
According to IBISWorld Industry Analyst Leah Goddard, “As a result of the recession and slow recovery period, price-based competition among industrial designers intensified as participants lowered their service prices in an effort to bolster waning demand.”
Profit suffered as a result, pushing firms out of the industry. Companies also faced mounting competition from nonemployer industrial designers, which continued to enter this low-barrier industry. Although the number of companies has declined, the entry of nonemployer industrial designers has increased the overall number of participants by an annualized 1.8% to 148,809 enterprises over the period.
“Demonstrating resilience during the recession, medical instruments and supplies manufacturers sustained demand for industrial designers through the worst of the recession, taking advantage of increased public and private health spending by continuing to innovate and introduce new products to the market,” says Goddard. Combined with the recovery of automakers and other downstream manufacturers in 2010, industry revenue turned the corner as corporate profit and investment into R&D rebounded. However, revenue growth is expected to be limited to 0.2% in 2013, as R&D spending slows due to continued uncertainty in the US economy.
IBISWorld forecasts a strong recovery for the Industrial Designers industry over the five years to 2018. As downstream industries begin to record higher sales, they will dedicate larger budgets to R&D. Simultaneously, consumers are increasingly seeking highly differentiated and aesthetically pleasing products, ranging from cars to electronics to furniture, generating sustained demand for industrial design firms.
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IBISWorld industry Report Key Topics
The Industrial Designers industry includes companies that primarily develop designs and specification for mass-produced products. This includes deciding the materials, construction, mechanism, shape, color and surface finishes of products in order to improve the product’s market appeal, production, use and maintenance. For example, industry operators design automobiles, furniture and packaging.
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