Improvements in domestic energy demand and availability of finance will support growth.
New York, NY (PRWEB) February 10, 2014
The Heavy Industrial Facilities Construction industry has slowly improved since experiencing large revenue declines following the financial crisis. “Industry revenue surged in the mid-2000s as firms benefited from an increased demand for new plants from private power companies, which began in the late 1990s after the deregulation of the energy industry,” according to IBISWorld Industry Analyst Jeremy Edwards. However, the industry's environment was radically altered by the recession when demand for industrial facilities development slowed and financing was restricted for all construction projects. The industry has yet to approach the revenue growth experienced during the prerecession boom.
However, the industry has slowly built momentum, with revenue rising each year since 2009. Demand for industry services has improved, as a move toward renewable and clean energy has reinvigorated downstream markets. In addition, government spending and fiscal stimulus packages have largely supported the industry. Rising business confidence and corporate profit margins are also leading to new investment, which has precipitated industry growth. Over the five years to 2014, the industry is projected to grow at an average annual rate of 1.9% $27.2 billion. However, the industry is expected to contract 0.7% in 2014, as subdued demand from the energy sector weakens demand for major facility construction.
“As revenue improved during the past five years, the number of industry operators began to rise, which has increased the level of competition in the industry,” says Edwards. Firms in the industry compete for jobs by submitting a bid, and investors seek the bid that will complete the intended project with high quality at the lowest cost. Consequently, industry profit margins have dwindled over the past five years.
The overall value of utilities construction, the availability of credit and the movement in specific downstream industries play a large role in guiding the direction of the Heavy Industrial Facilities Construction industry. During the next five years, government regulation of power generation, such as the push for cogeneration power plants, will benefit industry performance. Industry revenue should also receive a boost from the continued growth of renewable energies requiring new and more efficient transmission equipment.
For more information, visit IBISWorld’s Heavy Industrial Facilities Construction in the US industry report page.
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IBISWorld industry Report Key Topics
Firms in the Heavy Industrial Facilities Construction industry primarily construct, alter, add to, repair and maintain industrial nonbuilding structures, such as chemical complexes, cement plants, refineries, incinerators, ovens, kilns, power plants (except hydroelectric) and nuclear reactor containment structures. Establishments in the industry may subcontract some of the actual construction work.
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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