The industry will steadily recover as demand from manufacturing and construction increases
Los Angeles, CA (PRWEB) April 02, 2013
The Metal Plating and Treating industry has moderately contracted over the past five years due to stagnation in the manufacturing sector. This industry provides services to fabricated metal product manufacturers, such as structural steel, steel sheet and steel coil manufacturers. These downstream manufacturers then supply the manufacturing sector. During the recession, manufacturing output sharply declined, lowering demand for metal products, which lowered demand for industry services. While demand has recovered since 2009, the manufacturing sector is expected to remain below prerecession levels over 2013. As a result, IBISWorld expects industry revenue to fall at an annualized rate of 0.1% to $2.8 billion in the five years to 2013. In 2013, this industry is expected to be in full recovery. Over the year, construction spending is anticipated to increase strongly, bolstering demand for structural steel products, which require the industry's zinc-coatings, says IBISWorld industry analyst David Yang. However, after three years of recovery from 2010 to 2012, the manufacturing sector is estimated to slightly contract in 2013. Manufacturing slowdown is expected to dampen industry growth in 2013. Nevertheless, revenue is estimated to increase 1.9% over the year.
The Metal Plating and Treating industry is highly fragmented. Outsourced services from downstream steel and metal product manufacturers drive demand. Each downstream customer may have different product specifications and service requirements, making it difficult for any one company to provide services to all customers, continues Yang. As a result, most operators are relatively small local companies that focus on providing one or two related services. For instance, some specialize in galvanization, while others specialize in electroplating. Industry operators also target specific downstream industries. For example, Provincial Galvanizing Limited, located in Saskatoon, SK, primarily serve structural metal and utility pole line manufacturers. Over the past five years, market share concentration has increased because high revenue volatility and stagnant demand caused some operators to exit this industry.
Profitability suffered during the past five years, due to growing input costs, stagnant demand and competition from abroad. Zinc, the primary input used by industry operators, exhibited high price volatility over the past five years. On average, the world price of zinc is estimated to increase at an average annual rate of 2.1% from 2008 to 2013. High input costs, combined with poor demand, cut into the profit margins of industry operators. In addition, some downstream businesses turned to international markets to obtain precoated metal products, which put pricing pressures on industry operators and lowered profitability. As a result, this industry has steadily consolidated, with the remaining companies focused on improving efficiency through technology. Over the next five years, this industry is projected to steadily recover as demand from the manufacturing and construction sectors increase. Construction is anticipated to grow strongly, leading to consistent demand for zinc-coating services. The manufacturing sector is also forecast to grow, bolstering demand for galvanization and other metal-treating services. For more information, visit IBISWorld’s Metal Plating and Treating in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry provides coating, engraving, heat treating and metal processing services. Other activities include tempering, brazing, plating, polishing, sand-blasting and colouring metals.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized 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 US and Canadian 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 Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.