Although the improving economy led to growth, rising imports will usher in declines.
New York, NY (PRWEB) February 09, 2014
The Hand Tool Manufacturing industry has experienced a strong recovery from the economic recession. In the five years to 2014, revenue for the Hand Tool Manufacturing industry is expected to grow at an annualized rate of 3.5% to roughly $7.0 billion. Despite this steady annualized growth, the industry is not expected to reach prerecession revenue levels, and this is expected to be an effect of increasing trade in the industry. “The housing crisis negatively impacted the demand for hand tools, as construction firms cut back on projects and consumers delayed home renovations,” according to IBISWorld Industry Analyst James Crompton. Existing homeowners and other general consumers curtailed spending on home improvement projects and associated hand tools and other equipment. This led to a drop in revenue of 23.1% in 2009.
Nonetheless, as the economy gradually improved, the industry has experienced a swift return to growth. Consumers flocked back to the market to unleash pent-up demand for purchases of hand tools for home improvement projects they delayed during the recession. Additionally, growth in the big-box retailers segment proved extremely beneficial for industry operators. “While specialty retailers faltered during the downturn, big-box retailers and other large home improvement store brands like The Home Depot and Lowe's enticed customers with incentives,” says Crompton. As consumers continue to purchase new hand tools, the industry is expected to experience growth of 1.6% during 2014.
Over the next five years, the industry is expected to grow modestly. A burgeoning import market will continue to cannibalize demand for domestically produced goods. However, a relatively steady US dollar exchange rate is expected to help bolster export sales. Hand tools produced in China and Taiwan are expected to gain steam as lower production costs facilitate reduced prices for consumers. Finally, growth in input prices, most notably steel, is expected to pressure industry profitability. To salvage some profitability, manufacturers will likely pass cost increases on to consumers. This will likely hamper demand as consumers look for lower-cost alternatives.
For more information, visit IBISWorld’s Hand Tool Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry primarily manufactures hand tools, including mechanics' hand service tools, precision measuring tools, agricultural tools and woodcutting tools. This industry does not include power hand tools of any kind (electric or hydraulic).
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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