Heavy reliance on commercial construction led to steep declines during the recession
Los Angeles, CA (PRWEB) February 14, 2013
The Firestop Contractors industry has been unsteady over the five years to 2013, with revenue expected to decline at an annualized rate of 4.3%. Although the recession reduced the level of private nonresidential construction investments, one of the industry's primary downstream markets, several other factors led to fluctuating demand during this period. According to IBISWorld industry analyst Deonta Smith, “the economic downturn forced federal and state governments to decrease investments in industry-specific activities.” While institutional facilities currently make up about 36.0% of industry revenue, the demand from this sector declined over the past five years as tax revenue was allocated to other sectors of the economy. Additionally, tightened lending standards and decreased consumer spending has delayed or suspended demand from commercial and industrial customers.
During 2008, investment in nonresidential construction fell, causing revenue and profit to decline. Many participants sought to lower operation costs to stabilize fluctuations in profit and offset losses from suppressed demand. Cutbacks consisted of workforce cuts; the total number of employees is expected to decrease at an average annual rate of 2.4% to 2,040 workers in the five years to 2013. Simultaneously, wages in the industry are expected to fall at an average annual rate of 4.6% to $100.9 million. “Following the recession, however, increased regulations and innovations in firestopping systems have been renewing demand for industry services,” says Smith. As a result, the Firestop Contractors industry is expected to grow in 2013, prompting an estimated 0.8% rise in revenue to $264.4 million.
In terms of revenue growth, the next five years are set to be bright for the industry. A boost in government lending will benefit firestop contractors; increased investment in industrial infrastructure will ultimately result in higher demand for firestop construction projects. This trend is expected to stabilize growth and eventually help reduce revenue volatility; as such, revenue is projected to continue its recent upward trend through 2018. Furthermore, market share concentration will likely increase in the next five years as small companies serving niche markets face competition from larger established contractors. Therefore, enterprise growth is forecast to be minimal, as larger companies seek to achieve economies of scale by acquiring other companies. For more information, visit IBISWorld’s Firestop Contractors in the US industry report page.
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IBISWorld industry Report Key Topics
Contractors in this industry primarily construct and maintain firestops, which are passive fire-protection systems used to seal openings and joints in wall and floor assemblies. Firestops include fire and smoke dampers as well as fire doors. The industry does not provide fireproof insulation services.
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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