Although the industry will expand, an unstable housing market will suppress growth.
New York, NY (PRWEB) June 12, 2014
The Concrete Contractors industry plays a central role throughout Canada's construction sector. Virtually every newly built structure requires concrete, most commonly as a building's foundation, floor, internal superstructure or exterior cladding. Concrete is used heavily for raising office buildings and retail structures (e.g. malls and civic centres), as well as in energy infrastructure, construction of highways and other industrial buildings. Many contractors rely on the single-family housing market, which provides smaller operators with a high volume of contracts each year. However, larger operators rely less on the housing market and more on other markets, such as bridge and tunnel construction. As a result of the diverse uses for concrete, the industry experienced minimal damages during the recession. However, volatility in downstream industries persisted, leading revenue growth to be slow over the five-year period. In the five years to 2014, IBISWorld anticipates that the industry will grow at an annualized rate of 1.4% to $3.5 billion, with growth of 1.8% in 2014 alone.
Over the five-year period the industry has seen profit margins expand due to increased demand in the housing market. While profit margins have expanded in 2014, they have fluctuated year to year based mostly on demand. According to IBISWorld Industry Analyst Daniel Carusotto, “As demand fluctuated over the period, the pool of work for industry operators increased overall, leading to less price competition and, in turn, benefiting margins.” However, with barriers to entry being low, competition in this segment remains high, inhibiting profit margins from widening too much. In the next five years, profit margins are expected to improve slightly as demand from the construction and government sectors continue to improve.
“Canadian construction markets are projected to progress steadily in the five years to 2019, fueling the C oncrete Contractors industry,” says Carusotto. Over the five-year period, industry revenue is also expected to grow. In the previous five-year period, the industry experienced volatility as a result of lingering effects from the recession. However, the next five years will be characterized by more stable growth across the residential and commercial segments, benefiting industry participants and helping revenue grow faster than in the previous five-year period.