Significant offshoring and price competition from imports will stifle revenue growth.
New York, NY (PRWEB) March 20, 2014
Products manufactured by the Toy, Doll and Game Manufacturing in Canada industry are discretionary items and so demand for these products depends on the prevailing economic conditions and economic outlook. These factors have considerable influence on consumer confidence, which in turn affects consumer spending and downstream demand. However, most of these drivers took a turn for the worse during the recession, severely hurting industry revenue.
According to IBISWorld Industry Analyst Zeeshan Haider “With manufacturers producing overlapping goods, price competition in this industry is high and domestic operators have been forced to reduce prices to compete with inexpensive imports, sourced from low-cost economies such as Vietnam and China, the latter of which produces about 80.0% of the world's toys.” However, as a labour-intensive industry, imports have a significant advantage when it comes to production costs. As a result, domestic operators have been forced to settle for lower profit margins in order to remain competitive. In addition to this, many companies in this industry have completely disbanded Canadian manufacturing operations and shifted production facilities to East Asia, which has also reduced the number of industry enterprises.
Given the significant offshoring and price competition from imports, which are expected to account for 94.7% of domestic demand in 2014, revenue growth is expected to remain subdued. Over the five years to 2014, industry revenue is expected to grow at an annualized rate of 2.2% to $309.3 million, with an expected decline of 1.1% in 2014. However, revenue is still below 2006 levels, after which it started experiencing severe declines. This inadequate recovery in revenue growth is fuelled by the overall economic recovery coupled with significant investments made by major player, Mega Brands.
Over the five years to 2019 industry revenue will remain stagnant. “Despite the reshoring movement gaining momentum and manufacturing industries aiming to return to the United States in order to serve the North American and Western European markets, Canada is not expected to benefit from this transition,” says Haider. According to Nigel South, chair of the Toronto chapter of the Society of Manufacturing Engineers, high labour and utility costs coupled with a strong Canadian dollar will hinder Canada's ability to attract manufacturers. Therefore, industry revenue is expected to grow over the five years to 2019.
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IBISWorld industry Report Key Topics
The Toy, Doll & Game Manufacturing in Canada industry comprises companies that manufacture dolls, doll accessories, action figures, toys, games (including electronic), hobby kits and children’s vehicles (except metal bicycles and tricycles).
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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