Greater spending on remodeling and housing starts will support revenue growth.
Los Angeles, CA (PRWEB) October 08, 2012
The Cabinet and Vanity Manufacturing industry has been severely set back by a prolonged and substantial downturn in the housing construction and home remodeling markets. Homebuilders, architects, designers, retailers and consumers purchase most industry goods during the construction of new houses, or as part of a kitchen or bath remodeling project. Unfortunately for the industry, both of these markets contracted significantly as a result of weak consumer spending and a severe drop in investment into single-family residential construction during and after the recession. Industry revenue began contracting in 2007, as falling home prices dampened consumer spending and the construction of new houses slowed. Subsequently, industry revenue fell three straight years, dropping as much as 30.3% in 2009 during the trough of the Great Recession. According to IBISWorld industry analyst Sean Windle, in the five years to 2012, industry revenue is expected to decline at an average annual rate of 9.0% to $12.3 billion.
In response to weakened demand, industry firms have shut down manufacturing plants, slashed jobs and streamlined operations, says Windle. In the five years to 2012, industry firms have declined at an estimated average annual rate of 3.2% to 8,347 enterprises. Industry employment is expected to contract at an annualized rate of 7.1% during the period to 95,593 workers. Industry profit has also been impacted by weak demand and the price volatility of certain commodities and raw materials. The Cabinet and Vanity Manufacturing industry exhibits a low market share concentration. In 2012, IBISWorld estimates the largest industry manufacturers will include Fortune Brands & Home Security and the Masco Corporation. The remainder of the market is captured by a large number of small and privately owned businesses that serve local retail markets. Over the five years to 2012, industry concentration has increased because many firms have been driven out of business. In the wake of the subprime mortgage collapse and subsequent recession, housing construction activity in the United States slowed to a trickle. IBISWorld projects industry concentration will continue to increase through 2017.
The industry began to see revenue growth in 2011 and is expected to grow a further 8.6% in 2012 as consumer spending grows and the housing market begins to stabilize. IBISWorld forecasts steady growth for the industry in the five years to 2017. Demographics will play a key role in the demand for housing, as a large segment of the population is gearing up to enter the homeowners market and will encounter a limited inventory of new homes. As more people buy homes, housing starts will accelerate and demand for industry products will increase. Additionally, due to deferred maintenance during the downturn, a significant number of properties will be in need of rehabilitation, which will include upgrades to kitchen cabinetry and bath vanities. For more information, visit IBISWorld’s Cabinet and Vanity Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry includes businesses that manufacture kitchen cabinets, bathroom vanities and countertops primarily made of wood or wood coverings. Manufacturers distribute their products to wholesalers, contract outfitters and home improvement stores in the United States.
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.