Accelerating recovery in the construction sector will strengthen demand for alarms
Los Angeles, CA (PRWEB) December 19, 2012
After years of strong performance, the Carbon Monoxide Alarm Manufacturing industry's growth faced a hiccup during the economic downturn. The subprime mortgage collapse and subsequent recession froze credit markets and led to a tremendous slowdown in residential and nonresidential construction activity. Since carbon monoxide (CO) alarms are often installed during the construction process, industry demand fell sharply as contractors either delayed or canceled new building projects. In 2009, industry revenue fell a whopping 14.2%. Revenue returned to growth in 2010, albeit slowly, rising 1.5%. Despite consistent growth after the recession and an expected revenue jump of 7.0% in 2012, revenue is expected to total $1.07 billion during the year, marking an annualized decline of 0.7% from 2007 to 2012, says IBISWorld industry analyst Eben Jose.
Thanks to mostly weak demand from the recession and increases in raw material prices, industry profit has declined over the past five years. The main culprit for higher raw material expenses has been the price of plastic materials and resin, which has risen at an annualized rate of 3.6%. These factors also led to a decline in industry participation because many CO alarm manufacturers were forced to exit the industry under pressure from weak demand and constrained margins. The Carbon Monoxide Alarm Manufacturing industry has a moderate level of concentration. Concentration has increased over the past five years due to major players United Technologies Corporation and Jarden Corporation making extensive acquisitions and broadening their product lines, continues Jose. In the five years to 2012, the number of establishments in this industry has fallen at an annual rate of 0.7% to 84 locations. The increase in acquisition activity has allowed the top firms to lower their variable costs by increasing their scale. With more scale, they have been able to leverage lower input costs and obtain better contracts with distributors, which has increased profitability.
Although the recession brought challenges to the industry, the future looks bright for CO alarm manufacturers through 2017. The recovery that began in the construction sector in the latter half of the past five years will accelerate and strengthen during the next five years. In addition, a host of new states are expected to join the more than 25 states that already require CO alarms in certain residential and commercial buildings. These new regulations will provide a solid basis for industry growth in the five years to 2017, in which revenue is expected to grow. For more information, visit IBISWorld’s Carbon Monoxide Alarm Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures carbon monoxide detectors. These devices detect the presence of carbon monoxide to prevent carbon monoxide poisoning. Carbon monoxide is a colorless and odorless compound produced by incomplete combustion.
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.
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