Prices for plumbing services are forecast to continue increasing as input costs and demand rise
Los Angeles, CA (PRWEB) January 17, 2014
Plumbing construction services has a buyer score of 3.3 out of 5. According to IBISWorld procurement analyst Erick Delgado, “this score reflects future pricing trends that will limit the buyer's ability to negotiate from historically high prices”. Other factors that negatively affect buyer power are a lack of substitutes, high volatility in demand for construction, and the risks involved with switching providers. However, low price volatility, low market share concentration and low vendor financial risk positively affect buying power.
Although there is a moderate degree of demand volatility from the construction sector, price growth will remain stable during the three years to 2016. This is a result of continuous demand for maintenance and repair services on existing buildings, which account for a larger share of industry revenue. Low price volatility promotes a stable purchasing environment for buyers by allowing them to accurately budget and evaluate prices over time. As the economy continues to recover, demand for plumbing services will increase from major downstream industries, particularly new construction. Rising insurance costs and material prices will continue to pressure plumbing service providers' profitability in the three years to 2016. “As a result, prices will increase during this period and weaken buying power”, says Delgado.
Due to plumbing being labor intensive, and the amount of training required to ensure quality, there are no viable substitutes for the service. In addition, buyers that switch contractors mid-job will face high switching costs due to delays in project completion and new start-up costs. These factors negatively affect a buyer's ability to negotiate. A highly fragmented market has encouraged price-based competition among suppliers. The emergence of large-scale facilities maintenance companies has contributed to increased competition, which boosts buyer negotiation power. Moreover, a steady demand for plumbing repairs contributes to a low risk of bankruptcy among suppliers, especially among facilities maintenance firms. This allows buyers to be more secure in negotiating long-term contracts. The major vendors in this market are EMCOR Group Inc., Chemed Corporation, ARS/Rescue Rooter, and Comfort Systems USA Inc.
For more information, visit IBISWorld’s Plumbing Construction Services procurement research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of plumbing construction services. Plumbing construction services include copper repiping, liquid and gas-conveying pipe work, septic system construction, sewer hook-up and connection building, installation and repair services for hot water systems, fire sprinkler and irrigation sprinkler installation, and emergency repairs and maintenance services. Contractors may also supply parts (such as plumbing appliances, pipes and coupling products) as well as labor. This report excludes other specialized trade construction, such as boiler and furnace construction; aqueducts, pumping stations, treatment plants, storage tank and sewer line construction; and heating, cooling and air conditioning (HVAC) construction services.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Vendor Financial Benchmarks
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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