Revenue has increased due to strong government investments in construction.
New York, NY (PRWEB) March 21, 2015
The Asphalt Manufacturing industry has experienced volatile demand over the past five years. The US housing crisis dragged down the domestic housing market, causing domestic residential construction to fall. “The industrial sector also took a hit during the recession, causing nonresidential construction investments to contract substantially,” according to IBISWorld Industry Analyst David Witter. As a result, industry revenue decreased as much as 7.6% in 2010. Since then, the industry has continued to experience considerable revenue volatility, brought on by concerns of a housing bubble in Canada. Overall, however, revenue has increased due to strong government investments in road and highway construction. In the five years to 2015, IBISWorld expects industry revenue to increase at an annualized rate of 2.5% to $4.3 billion.
Government infrastructure funding was critical for industry growth. The Building Canada Fund, Infrastructure Stimulus Fund and Canada Strategic Infrastructure Fund provided a combined $17.1 billion for infrastructure projects, which greatly bolstered road and highway construction activity. As a result, demand for asphalt concrete, blocks and paving products increased, translating into revenue growth for industry operators. “However, government funded projects were mostly short-term stimulus initiatives,” says Witter. In 2015, government funding is expected to rise at a sluggish 0.4% rate. Despite stagnant funding and housing bubble concerns, revenue is anticipated to rise 3.0% in 2015.
Industry profit is expected to spike in 2015 to total 15.4% of industry revenue. The world price of crude oil has taken a wild course during the most recent five-year period, climbing 30.6% in 2011 and falling a projected 41.1% in 2015. Because asphalt is a derivative of crude oil, industry operators will benefit from lower input prices.
Over the next five years, the industry is projected to grow as downstream demand picks up. Residential construction expenditure is expected to grow at an annualized rate of 0.2% over the period. Housing construction and renovation spending will gradually expand, fuelling demand for asphalt shingles and roofing products. Industry operators will also benefit from the US economic recovery, which will boost asphalt roofing product exports to the United States. As a result, IBISWorld forecasts that industry revenue will grow through 2020, though continuing housing bubble fears will slightly constrain demand.
For more information, visit IBISWorld’s Asphalt Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures paving and roofing materials, including asphalt and tar-paving mixtures, blocks, roofing cements, coatings and shingles produced from purchased asphaltic materials and coal tar. This industry excludes asphalt paving products directly produced from petroleum refineries.
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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