Rising construction and remodelling activity will revive demand and stabilize revenue.
Los Angeles, CA (PRWEB) March 27, 2013
The Roofing, Siding and Insulation Wholesaling industry has performed inconsistently over the five years to 2013, with revenue growing only slightly, at an average annual rate of 0.7%. The most densely populated provinces, such as Ontario and British Columbia, are home to the greatest demand for new construction projects, thus contributing the most to industry revenue, says IBISWorld industry analyst Deonta Smith. However, the recession has forced significant reductions in construction-related investments. In response, the federal government has provided the Canada Economic Action Plan to stimulate the construction sectors, encourage home ownership and increase investments in energy efficiency. As a result, there has been considerable growth in residential and nonresidential construction starts and home remodelling projects, as the housing market rebounded in 2010. However, as a number of measures are set to expire in 2013, the industry is expected to experience a setback that year, prompting an estimated 0.5% drop in revenue to $6.4 billion.
Over the past five years, revenue volatility became a concern for industry players, resulting in many participants seeking consolidation opportunities to become more stable and achieve greater economies of scope. This restructuring pushed down the number of establishments at an average annual rate of 0.6% in the five years to 2013. Simultaneously, a number of wholesalers exited the industry amid decreasing demand for residential construction projects and a reduction in private investment in related projects. As such, the total number of enterprises in the industry is expected to decrease at an average annual rate of 0.6% to 246 companies over the period. The Roofing, Siding and Insulation Wholesaling industry has a low market share concentration and is characterized by many small-scale, geographically dispersed participants. The low concentration indicates that the industry is highly fragmented and that there is significant scope for consolidation by some of the industry's major players, continues Smith.
Many larger companies have managed to gain market share through acquisitions. For example, Beacon Roofing Supply Inc. acquired Enercon Products Inc. in May 2011. Additionally, the low concentration also accentuates the industry's high level of competition. IBISWorld estimates that market share concentration has increased over the five years to 2013, as many participants had revenue severely diminish during the economic downturn, resulting in many companies exiting the industry.
The next five years are set to be bright for the industry. Higher residential and private investment will benefit the industry by pushing for more new construction and expansions to existing structures. This trend is expected to boost the overall demand for roofing, siding and insulation materials and help stabilize revenue volatility. Subsequently, market share concentration will likely decrease over the next five years as potential participants are enticed by the industry's improved demand. For more information, visit IBISWorld’s Roofing, Siding and Insulation Wholesaling in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry comprises establishments that wholesale nonwood roofing, siding and insulation materials. Sales are typically direct to building contractors, large retail hardware chains and small independent hardware stores.
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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