New York, NY (PRWEB) April 24, 2014
Hand tool and cutlery producers in Canada manufacture a wide variety of metal products, including lawn and garden implements, construction tools, kitchen utensils and flatware. Although these diversified product offerings generally shelter the industry from macroeconomic fluctuations, their largely homogeneous and low-cost nature render manufacturers vulnerable to pressure from low-price substitutes. As a result, imported products manufactured in low-labour-cost countries have flooded the Canadian market in recent years. At the same time, the Canadian dollar has appreciated since 2009, limiting the appeal of Canadian goods in export markets and making imports even more affordable in the domestic market. Under these pressures, revenue for the Hand Tool and Cutlery Manufacturing industry has fallen 0.8% per year on average during the past five years, to just $708.1 million in 2014.
The costs of major industry imports, such as steel and aluminum, have also grown over this period, squeezing average industry margins to just 7.0% of revenue in 2014. According to IBISWorld Industry Analyst Jocelyn Phillips, “Shrinking industry profitability has made it difficult for many firms to stay in business, and the total number of industry companies has steadily fallen during the past five years, aside from a one-year increase in 2010 that was attributed to downstream recovery in recession-stricken foreign markets.”
Exports to the United States account for more than half of industry revenue, so volatile economic conditions in that country have had a significant impact on industry performance in recent years. However, as US manufacturers continue to recover from the recession, the United States will likely begin to satisfy an increasingly larger share of its own demand for industry products, limiting the export market for industry producers.
“Without even the recovery from the global recession to drive growth in the next five years, the outlook for the Hand Tool and Cutlery Manufacturing industry is bleak,” says Phillips. Import pressure will remain steady, causing some businesses to exit the industry, and employment will likely suffer accordingly. Some niche opportunities will likely continue to exist for specialty, handcrafted or "Made in Canada" items, but the companies best suited for survival in this industry during the next five years are global behemoths with favourable supply and distribution contracts, like Procter and Gamble and Stanley Black and Decker.
For more information, visit IBISWorld’s Hand Tool and Cutlery Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
The Hand Tool and Cutlery Manufacturing Industry comprises establishments primarily engaged in manufacturing nonprecious and precious plated metal cutlery and flatware; manual hand and edge tools; manual handsaws; all types of saw blades, including those for sawing machines; metal kitchen utensils; and pots and pans (except those manufactured by casting).
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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