Los Angeles, CA (PRWEB) October 15, 2012
Underpinned by booming global demand for mineral and energy commodities, the Mining, Oil and Gas Machinery Manufacturing industry grew during the first half of the five years to 2012. According to IBISWorld industry analyst Josh McBee, “Rising resource prices led mining and oil industries to expand existing production and increase exploration, resulting in strong demand for machinery and equipment.” Following the financial crisis of late 2008, credit crises and weaker commodity prices resulted in a sharp downturn in energy and mineral exploration and production. Decreased demand for industry products in 2009 and 2010 offset previous and subsequent gains. As a result, IBISWorld expects industry revenue to post average declines of 0.5% per year during the five years to 2012.
Conditions have improved since 2011, partly due to the resilient Chinese economy, which is stimulating global mining activity. “Singapore has also emerged as a hotspot of export demand,” says McBee. As a result, revenue is expected to increase 3.0% to total an estimated $20.2 billion in 2012 as global demand picks up. Lingering economic uncertainty and weak global drilling activity, however, will continue to pose threats and negatively affect capital expenditure plans in oil and gas exploration and development.
IBISWorld estimates that the four largest players in the Mining, Oil and Gas Machinery Manufacturing industry account for the majority of the value of all industry shipments. Industry concentration has increased during the past five years due to significant growth in the oil and gas field sector (which contains this industry's largest companies) and consolidation among oil and gas field players. The purpose of most mergers is to increase a company's penetration into related markets, augment the company's current offerings or establish a presence in an overseas market. In May 2011, the US government cleared Caterpillar Inc.'s acquisition of Bucyrus International for an estimated $8.6 billion. Also in May, Milwaukee-based Joy Global Inc. announced an agreement to buy equipment designer and builder LeTourneau Technologies for $1.1 billion. In April 2008, National Oilwell Varco Inc., the industry's largest player, acquired Grant Prideco Inc., a major US manufacturer of oil well equipment, for $7.35 billion. At the date of acquisition, Grant Prideco had 25 US manufacturing plants and controlled about 60.0% of the global drill-pipe market. The industry's increased market concentration further bolsters the pricing power of the industry's four largest players. IBISWorld anticipates market share concentration to continue increasing as consolidation increases.
After a relatively strong year in 2012, industry firms are expected to continue steady growth in 2013, with rising commodity prices encouraging customers in the mining, oil and gas sectors to resume spending on machinery and equipment. This trend is anticipated to continue through 2017. Heightened global efforts to discover new oil and gas reserves will further stimulate industry sales. In addition, shale gas, which is a type of natural gas produced from sedimentary rock, will play a key role in the growth of the domestic energy industry as concerns about global warming escalate. Meanwhile, the relatively weak dollar will underpin robust growth in exports over the next five years. As a result of these factors, IBISWorld projects industry revenue to increase at an annualized 4.6% to total $25.3 billion through 2017.
For more information, visit IBISWorld’s Mining, Oil & Gas Machinery Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Establishments in this industry manufacture oil and gas field equipment and underground mining machinery. Products include rotary and portable drilling rigs and parts; crushing, pulverizing, screening and mineral processing machinery; and derricks, substructures and related accessories. Parts are included, but support services are excluded.
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 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.