In the past two years, rising wallboard prices and cost-saving measure have saved profit margins.
Los Angeles, CA (PRWEB) April 23, 2013
The recession took a heavy toll on nearly all of the Gypsum Product Manufacturing industry's downstream markets. “After demand from residential construction plummeted due to overbuilding and loose lending practices, nonresidential construction activity slumped in response to low consumer spending and reduced access to credit,” IBISWorld industry analyst Hayden Shipp says. Demand for wallboard from repair and remodeling activity also declined, but became an increasingly important share of the industry's shrinking revenue as new construction ground to a halt. In fact, the only significant market in which industry revenue showed absolute growth in the five years to 2013 was exports, which grew modestly at an annualized rate of 0.3% due to increasing demand for gypsum in emerging markets. After shrinking to its lowest level in decades in 2011, industry revenue grew encouragingly in 2012 due to revived construction activity; it is expected to continue the trend in 2013 with 7.5% growth to $3.8 billion. Overall, however, industry revenue declined at an annualized rate of 5.6% during the five years to 2013.
With declining demand, the Gypsum Product Manufacturing industry restructured with layoffs and divested facilities, resulting in a decline in wallboard production. In 2012 and 2013, rising wallboard prices in combination with these cost-saving measures salvaged the industry's average profit margin, which increased in the five years to 2013. “Wallboard manufacturers invest heavily in research and development, and because this practice continued even during the recession, the industry was well positioned to capitalize on the construction sector's inevitable recovery with new products,” Shipp says.
The Gypsum Product Manufacturing industry has a high degree of ownership concentration. The leading firms have operations spread across the continent, while most of the remaining companies are small- to medium-scale firms employing fewer than 10 people. Industry concentration has increased during the past five years because smaller and less profitable companies exited the industry during the recession; these exits alongside contracting industry revenue have been enough to increase ownership concentration even though merger and acquisition activity has slowed among the major players. The four largest players are USG Corporation, New NGC Inc., Koch Industries Inc. and Compagnie de Saint-Gobain.
Demand for gypsum products from residential and nonresidential construction markets grew for the first time since the recession in 2010 and 2011, respectively, and are forecast to continue growing strongly in the five years to 2018. With housing starts expected to increase during the next five years, demand for gypsum products will remain healthy in the near future. Through 2018, industry revenue is projected to grow. For more information, visit IBISWorld’s Gypsum Product Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in this industry manufacture gypsum products, such as wallboard, plaster, plasterboard, molding, ornamental moldings, statuary and architectural plasterwork. Gypsum product manufacturers may mine, quarry or purchase gypsum for use in the manufacture of their goods.
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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