Operators benefited from strong export demand, with exports accounting for half of the industry's revenue.
New York, NY (PRWEB) February 23, 2014
The Engine and Turbine Manufacturing industry consists of two major segments: engines (other than gasoline powered) for highway and heavy-duty vehicles and power-generation equipment for utility plants. Industry revenue hinges on demand from freight transportation and truck manufacturers who purchase diesel engines. According to IBISWorld Industry Analyst Stephen Morea, “The industry is also dependent on industrial activity, which determines how many turbines and generators are sold.” Trade is essential to this industry; the industry benefited from strong export demand with exports accounting for over half of the industry's revenue. Although revenue plunged 26.7% in 2009 during the global recession, the subsequent recovery offset that tumultuous year. In particular, the industry experienced a 27.5% surge in 2011, as strong investments in industrial machinery translated into more purchases of engines and power equipment. In the five years to 2014, industry revenue is expected to increase at an annualized rate of 8.2% to a total of $47.1 billion.
With the exception of 2009, exports boomed because of increased demand from emerging economies in Asia and Latin America, as well as several years of a weaker US dollar, which makes US goods more affordable to buyers overseas. International trade in diesel engines and utility turbines comprise a significant proportion of industry revenue. At the same time, imports have been undercutting domestic demand for US produced goods. Foreign manufacturers offer lower prices because they operate with lower wage costs and less government oversight. Export demand is forecast to relax as the US dollar is projected to continue its gains against foreign currencies, making domestically manufactured products more expensive abroad. Therefore, in 2014, industry revenue is expected to increase only 0.8%.
Domestically, renewed truck transportation will drive diesel engine sales. Greater consumer spending will spur strengthening demand for freight and on-highway transportation. “As one of the industry's largest customers, increased freight-trucking leads to more sales of diesel engines,” says Morea. Also, demand from manufacturing will gain traction in light of higher consumer spending. With higher revenue, manufacturing firms will be able to invest in industrial equipment and machinery, which includes power generation units, heavy-duty diesel engines and engine components. Through 2019, revenue is forecast to increase.
The Engine and Turbine Manufacturing industry is highly concentrated. The three major players in the industry are General Electric, Caterpillar and Cummins. The industry's high concentration is also exhibited by an analysis of the number of employees per establishment. Nearly one-quarter, or 23.3% of industry establishments employ 500 or more workers. As a result of this high concentration, price competition is high, with industry products viewed by downstream markets as similar or homogenous.
For more information, visit IBISWorld’s Engine and Turbine Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Engine and Turbine Manufacturing industry manufacture turbines and equipment used for power transmission, such as generators, as well as diesel engines for highway vehicles and heavy-duty equipment. Parts and accessories are included, but wind turbines are excluded (see IBISWorld report 33361b Wind Turbine Manufacturing).
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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