Remodeling and new home construction are forecast to support an industry rebound
New York, NY (PRWEB) July 02, 2014
The Wood Flooring Manufacturing industry ebbs and flows with trends in the US housing market. Prior to the recession, wood floors were primarily used in new home construction. Housing starts plummeted between 2006 and 2009, causing a shift in industry revenue streams. According to IBISWorld Industry Analyst Antal Neville, “In the early part of the past five years, as new construction was at a standstill, the industry's major markets shifted, with the majority of demand coming from home improvements rather than new construction.”
Both new home construction and home improvement spending are anticipated to grow in 2014 as the US construction market continues to emerge from the depths of the recession. Over the course of the year, housing starts are expected to increase 17.3%, and home improvement spending will grow 5.1%. Consequently, IBISWorld expects revenue to grow 4.7% in 2014 alone. Because the industry declined prior to the current five-year period, its performance has realized strong growth during the five years to 2014, growing an annualized 7.5% to $1.7 billion.
Profit margins (i.e. earnings before interest and tax) have also improved in the past five years. Downstream markets opted for lower-priced wood flooring options when budgets tightened in 2009 and 2010, shrinking profit margins until they were razor thin. “Buyers have since turned to higher-value solid flooring products for their long-term investment value and increased overall purchase volumes, and both of these factors have contributed to healthier profit margins,” says Neville. Still, industry profit in 2014 stands below its prerecessionary level.
The outlook for the Wood Flooring Manufacturing industry promises moderate growth in revenue. As housing starts increase and the economy emerges from its recession, new home builders will create demand for wood flooring. Moreover, per capita disposable income is projected to improve as unemployment abates, so demand for flooring used in home improvement projects is also anticipated to rebound. At the same time, mounting competition from imports and from alternative flooring options will cause consolidation among industry players, as unprofitable firms get acquired or exit the industry altogether. Regulatory challenges will also increase as consumers and construction standards become increasingly environmentally conscious. As a result of these factors, industry revenue is forecast to increase over the five years to 2019.
For more information, visit IBISWorld’s Wood Flooring Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
The Wood Flooring Manufacturing industry includes establishments primarily engaged in manufacturing wood flooring, including oak and maple hardwood flooring.
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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