Demand for industry services will strengthen as downstream construction markets improve
Los Angeles, CA (PRWEB) June 13, 2013
The Excavators industry derives about three-quarters of its revenue from subcontracting services from private-sector clients, such as land development companies, institutional building contractors and residential contractors. The rest is derived from the excavation of land for nonbuilding construction (e.g. sporting fields, roadwork and water supply facilities). While nearly every construction project requires some kind of excavation work, the Excavators industry does not account for the total value of excavation work undertaken in the United States, says IBISWorld industry analyst Matthew MacFarland. Instead, industry activities are contested by general construction firms (i.e. contracted to construct a building or structure on cleared land), heavy construction contractors, highway and road contractors, engineering firms, demolition and wrecking contractors and other specialist contracting firms.
Industry revenue registered a sharp decline during the recession and has taken several years to recover. The deep contraction in the industry's performance corresponds with the sharp decline in demand for excavation services in the depressed housing market and the recession-induced downturn of the nonresidential building market. Some earthmoving contractors have benefited from a boost in federal funding for road, bridge and other infrastructure construction, but the extent of the slump in the downstream building markets has hit most contractors very hard, continues MacFarland. As a result, industry revenue is expected to fall at an annualized rate of 1.5% during the five years to 2013. Improving housing markets and a recovering economy helped turn the industry around in 2012, and growth of 7.1% is expected to bring revenue to $46.0 billion in 2013. The Excavators industry has a low level of concentration, as it is mainly composed of small-to-midsize contractors that operate in specific regional markets. Firms are increasingly offering services across several states or metropolitan areas in an attempt to lower downturn risks associated with local markets to increase revenue.
Through 2018, concentration is forecast to continue rising as larger national developers acquire smaller regional players to diversify and expand revenue. Demand for industry services is expected to strengthen with the continued recovery of the downstream construction markets. Private residential and nonresidential building construction is expected to pick up further in 2014, while sustained growth in the infrastructure and public building construction markets is forecast to be steady through 2018. For more information, visit IBISWorld’s Excavators in the US industry report page.
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IBISWorld industry Report Key Topics
This industry primarily excavates land for building construction. Activities include drilling shafts, foundation digging and drilling, and grading. The excavation work performed includes new work, additions, alterations and repairs.
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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