Distributors will benefit from the strong performance of heavy industry
Melbourne, Australia (PRWEB) February 01, 2013
The Welding Equipment Distributors industry has been a major beneficiary of the strong Australian economy and the booming mining and construction industries over the past decade. According to IBISWorld industry analyst Andy Brennan, “as an industry that supplies products crucial to the construction and maintenance phases of many major projects, the past decade of prosperity has led to strong demand for welding equipment and consumables”. Although the industry suffered small declines in revenue in 2008-09 and 2009-10 as major mining, engineering and manufacturing companies delayed capital investments, revenue has since rebounded strongly. IBISWorld expects revenue to grow at an annualised 4.1% over the five years through 2012-13.
Despite high demand for their products, most enterprises in the Welding Equipment Distributors industry operate on relatively slim profit margins. “Wholesalers by their nature are forced to accept prices of manufacturers and have limited ability to raise prices due to the competitive nature of the industry”, says Brennan. Still, the average industry profit margin has increased steadily over the past ten years. Welding consumables such as flux cored and MIG wire are the industry's biggest revenue earners. Although consumables are cheaper per unit than welding machines and safety equipment, welders require a constant year-round supply of consumables. The industry has a low level of concentration with only one major player – South Pacific Welding Group Pty Limited – accounting for a substantial share of revenue.
Over the next five years, the industry is positioned to benefit from the continued strong performance of heavy industry in Australia. As of early 2013, much discussion has focused on how long the mining boom will last and how severe any decline will be. Fortunately for distributors, welding equipment is demanded by a diverse range of industries. Any slowdown in demand from the Mining division will not be overly severe on the industry. One of the industry's main drivers is demand from gas extraction companies, and Australia's and the world's appetites for energy are expected to remain voracious. With a number of major pipeline and rail projects planned for the next five years, the industry's prospects are bright.
For more information, visit IBISWorld’s Welding Equipment Distributors report in Australia industry page.
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IBISWorld industry Report Key Topics
Companies in this industry distribute welding supplies, including rods, power units, torches and safety equipment. Gas and gas-only dealers are excluded, but some gas-oriented companies also distribute welding equipment. Welding equipment is used in a variety of construction and industrial activities.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Basis of Competition
Barriers to Entry
Technology & Systems
Regulation & Policy
About IBISWorld Inc.
Recognised as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every Australian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Melbourne, IBISWorld serves a range of business, professional service and government organisations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com.au or call (03) 9655 3886.