IBISWorld Market Research
There is an opportunity for businesses to operate in niche markets where Australian competitive advantage lies.
Melbourne, Australia (PRWEB) August 22, 2013
The Audio Visual Electronic Equipment Manufacturing industry in Australia has endured difficult conditions over the five years through 2012-13. Low-cost producers across Asia, combined with anaemic demand stemming from falling downstream manufacturing levels, have contributed to industry declines. Industry revenue is estimated to decline by an annualised 6.8% over the five years through 2013-14, as producers continue to move production offshore in order to capture greater profit margins through lower wage and capital cost manufacturing. According to IBISWorld industry analyst Alen Allday, “falling consumer and business sentiment, as a result of the financial crisis, also affected key downstream industries and subsequently reduced demand for manufacturing.” Industry revenue is projected to continue falling in 2013-14 by 2.9% to $1.4 billion.
Decreases in revenue have also resulted in declining enterprise and establishment numbers as businesses move operations offshore or leave the industry altogether. The industry is characterised by high barriers to entry, as large capital outlays are required in the form of factories and machinery. “High competition levels have created a difficult operating environment, forcing a moderate proportion of industry operators to close down,” says Allday. Profit margins have also fallen as industry operators contend with both domestic and international competition. The Audio Visual Electronic Equipment Manufacturing industry is characterised by a low level of market share concentration. There are few major companies in the industry, BAE Systems Australia Holdings Limited and Codan Limited among them.
The outlook for the industry remains poor. Although the local manufacturing and wholesaling markets are forecast to decrease at a slower rate, or stabilise, import competition will remain high and push more enterprises out of the industry. Industry terms of trade are expected to decline as imports increase, while exports decrease and international manufacturers capture additional market share. There is an opportunity for businesses to operate in niche markets in markets where Australian competitive advantage lies, in the manufacture of high value added goods. However, the transition into this type of manufacturing remains difficult. Australian niche markets remain small compared with other international economies such as the United States, Germany and Japan. There have been efforts by the Federal Government to increase innovation. However, the effectiveness, specifically to the industry, has been limited. Consequently, the industry is expected to continue to struggle.
For more information, visit IBISWorld’s Audio Visual Electronic Equipment Manufacturing in Australia industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry are predominantly engaged in the manufacturing of audio or visual equipment, components and receiving sets; sound reproducing and recording equipment; radio and television parts, components and receiving sets; earphones and headphones; and, other electronic equipment, parts and components.
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