Continued improvements in downstream markets will boost industry performance.
New York, NY (PRWEB) June 20, 2014
Despite improvements in industrial capacity utilization, rebounding corporate profit encouraged operators in downstream markets to upgrade rather than repair their systems, tempering the performance of the Machinery Maintenance and Heavy Equipment Repair Services industry over the five years to 2014. Key downstream markets, including the construction and energy sectors, have improved sharply over the five-year period, with the value of nonresidential construction and the Oil Drilling and Gas Extraction industry revenue (IBISWorld report 21111CA) estimated to expand at annualized rates of 7.8% and 7.5%, respectively. However, the 6.2% annualized increase in aggregate private investment includes extensive investment in new machinery and equipment, which tends to decrease repair opportunities for depreciated and worn machinery. As a result, industry revenue is anticipated to increase at an annualized rate of only 0.3% over the five-year period to $6.4 billion, including a 2.2% decrease in 2014 revenue.
“In spite of subdued revenue growth, the industry's profit margin has improved significantly in recent years,” according to IBISWorld Industry Analyst Stephen Hoopes. The average price received by domestic operators for their services is anticipated to increase at an annualized rate of 2.6% in the five years to 2014. Alternatively, wages and purchases are expected to remain relatively constant over the five-year period, despite increases in the world price of steel, which tend to boost industry input costs. In addition, downstream markets continue to outsource their maintenance needs to industry operators, given the cost and quality advantages of this practice, including the increasing quality of the industry's labour pool. According to the latest available data from Service Canada, the share of heavy-duty equipment mechanics with at least a postsecondary degree now exceeds 70.0%, with the specialization of industry employees driving additional sales for operators.
Over the five years to 2019, industry revenue is forecast to increase. Continued improvements in downstream markets and the industrial capacity utilization rate are anticipated to drive industry labour and parts fees. “However, company growth rates will likely remain subdued as some markets experience a degree of saturation,” says Hoopes. Yet, the average industry operator's size is forecast to remain small given the lack of traditional benefits garnered from economies of scale in the industry.
For more information, visit IBISWorld’s Machinery Maintenance and Heavy Equipment Repair Services in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry offers maintenance and repair (M&R) services, such as blade sharpening and welding, for commercial, industrial, agricultural and other sectors that use heavy machinery and equipment. Automotive and electronic repairs are excluded from this industry.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
About IBISWorld Inc.
Recognized as the nation’s most trusted independent source of industry and market research, IBISWorld offers a comprehensive database of unique information and analysis on every US and Canadian industry. With an extensive online portfolio, valued for its depth and scope, the company equips clients with the insight necessary to make better business decisions. Headquartered in Los Angeles, IBISWorld serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.