Increased residential and nonresidential construction activity will boost demand
New York, NY (PRWEB) January 05, 2014
Competing trends from its downstream markets have led to volatile performance in the Alarm, Horn and Traffic Control Equipment Manufacturing industry during the past five years. Demand for industry products, which are often installed during the construction or manufacturing processes, plummeted during the recession, as overall construction activity fell. Moreover, industry operators suffered declines in 2008 and 2009, respectively. The industry then enjoyed a significant turnaround in 2010, when a rebound in vehicle manufacturing led to an impressive growth. Strong demand from automobile manufacturing and an improving housing market has led industry revenue to grow at an estimated annualized rate in the five years to 2013. However, weaker infrastructure spending, a slight dip in investments for nonresidential property and an appreciating dollar are expected to decrease industry revenue in 2013.
Even with the industry's overall positive revenue trend, according to IBISWorld Industry Analyst Darryle Ulama, “tough economic conditions, growing imports and diminishing exports have fueled a rash of consolidation and restructuring activity within the industry.” Manufacturers have offshored operations to take advantage of lower production costs overseas, compete with international players and tap the lucrative markets of rapidly urbanizing countries. While this trend has led to a drop in industry enterprises, it has helped increase profit margins in 2013. Also helping to fuel profit growth is the industry's shift toward specialty, higher-margin goods in the wake of importers supplying a greater share of the industry's basic products.
The Alarm, Horn and Traffic Control Equipment Manufacturing industry has low market share concentration. Although the top two companies (United Technologies Corporation and Tyco International Ltd.) are estimated to account for more than half of industry revenue in 2013, the remaining industry operators are smaller, regional players (see IBISWorld report 33429 for major player market shares). Moreover, despite the doom and gloom of the recession, “the industry is poised for growth over the next five years, albeit at a modest pace,” says Ulama. In the five years to 2018, industry revenue is forecast to increase, especially given that as residential and commercial construction activity picks up, demand for industry products will increase. Higher revenue growth will be limited by an appreciating dollar, which will discourage exports, and uncertainty surrounding public spending on infrastructure.
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IBISWorld industry Report Key Topics
The Alarm, Horn & Traffic Control Equipment Manufacturing industry manufactures communications equipment that include alarm systems, hazard detection systems, traffic signals, sirens and intercom systems. This industry excludes telephone apparatuses, radio and television broadcast equipment and wireless communications equipment.
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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