Demand from key markets is on the rise, but import penetration will pose a threat
Los Angeles, CA (PRWEB) August 01, 2013
The changing landscapes in technology and the consumption of audio and video content have shaken the Audio and Video Equipment Manufacturing industry over the past five years. A steep decline in consumer and business spending, paired with fast-paced offshoring, has caused revenue to decline significantly. Furthermore, consumers have substituted some of the industry's products with built-in alternatives in mobile phones and computers. As a result, IBISWorld estimates that industry revenue will decline at an average annual rate of 14.9% to $2.8 billion in the five years to 2013, down from $6.3 billion in 2008. However, as the broader economy recovers, revenue is expected to grow slightly in 2013 as downstream demand from the Car and Automobile Manufacturing (IBISWorld report 33611a) and the Movie Theaters (51213) industries increases. As a result, revenue is expected to rise 0.2% in 2013. Offshoring manufacturing to countries with cheaper labor is a dominant trend, especially for former major operators in the US industry. “Multinational corporations, such as Samsung, LG and Hitachi, have moved operations to low wage-cost countries, resulting in significant growth in import penetration as industry revenue declines,” says IBISWorld analyst Andrew Krabeepetcharat. The industry remaining in the United States mainly consists of high-quality sound-system producers, such as Bose. A recent exception includes Element Electronics, which in May 2012 became the first American company to open a US television manufacturing facility in decades.
Additionally, the industry has experienced increased industry consolidation as a result of constricted demand and offshoring. For example, Voxx International purchased Klipsch in 2011, significantly increasing its market share. Due to consolidation and offshoring, the number of industry enterprises is expected to decline at an annualized rate of 3.1% to total 404 during the five years to 2013. Concurrently, employment is anticipated to fall at an average rate of 14.7% per year to total 6,548 people. Continued offshoring and growing imports over the next five years will offset growing demand for industry products from consumers and downstream industries, including movie theaters and car manufacturers. During this time, industry revenue is projected to continue decreasing, albeit at a much more gradual pace. IBISWorld forecasts that industry revenue will decline in the five years to 2018.
The top four firms in the Audio and Video Equipment Manufacturing industry account for about 87.3% of industry revenue in 2013. Although these same firms only accounted for less than 58.0% of industry revenue in 2008, despite significant differences in the companies domestic manufacturing revenue. Other large firms, such as Hitachi, have moved a significant amount of production abroad during this time, shifting the major companies and significantly reducing the revenue garnered by the industry. According to Krabeepetcharat, concentration has also increased over the past five years as a result of this subsequent revenue decline. When including importers, industry concentration is significantly lower. Manufacturers located in Japan, South Korea and China are the major source of audio and video products supplied in the United States. For more information, visit IBISWorld’s Audio and Video Equipment Manufacturing in the US 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 includes firms primarily engaged in manufacturing electronic audio and video equipment for home entertainment systems, vehicles and public areas.
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 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.