Falling demand and rising import penetration have hampered industry growth.
New York, NY (PRWEB) April 26, 2014
Exacerbated by the recent recession, the Vacuum, Fan and Small Household Appliance Manufacturing industry has been on a downward spiral. The industry has been contending with stiff competition from low-cost manufacturers overseas. Since emerging economies typically have lower wages and less regulation, overseas operators can pass along savings to customers in the form of lower prices. In turn, price-sensitive consumers substituted domestic industry products for industry products manufactured abroad, because they are often more affordable. Additionally, the industry was dealt another blow with the onslaught of the recession, which decreased per capita disposable income, constraining consumers' ability to purchase industry products. As a result of these trends, IBISWorld estimates revenue will decline at an annualized rate over the five years to 2014, including a decline in 2014.
The influx of low-cost imports has continued to devastate domestic manufactures. In 2014, according to IBISWorld Industry Analyst Brandon Ruiz, “Imports are expected to account for the majority of domestic demand, with the overwhelming majority of industry imports coming from China.” Chinese manufacturers enjoy more relaxed labor and environmental regulations, allowing them to produce comparable goods at a fraction of the cost of US operators. These savings get passed down to downstream buyers in the form of lower prices. “To cut costs and remain competitive, domestic manufacturers have increasingly offshored or outsourced production to countries with low overhead costs,” says Ruiz.
While there are some well-recognized global Vacuum, Fan and Small Household Appliance industry manufacturers and brands (e.g. Jarden Corporation's Mr. Coffee and Oster brand) that appear to have a significant share of the market, the domestic small appliance manufacturing industry actually has a low market share concentration. Challenges are not expected to let up for the industry in the coming years as imports will continue to capture the majority of domestic demand in the long run due to lower prices. Additionally, the US dollar is expected to appreciate relative to other currencies, which will bolster domestic purchasing power and thus increase demand for imports. Moreover, the price of plastic materials and resin, a major industry input, is expected to trend higher, hampering profit margins for industry operators. IBISWorld expects industry revenue to decrease at an annualized rate in the five years to 2019.
For more information, visit IBISWorld’s Vacuum, Fan & Small Household Appliance Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Vacuum, Fan & Small Household Appliance Manufacturing industry primarily manufacture small electric appliances and housewares. Industry products include blenders, coffee makers, blow-dryers, portable heaters and electric floor-care equipment such as vacuum cleaners, floor waxers and polishers. The industry excludes manufacturers of major household appliances (e.g. refrigerators, convection ovens, dishwashers and microwaves) and air conditioners.
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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