A sharp decline in housing construction in 2007 provoked a steep drop in revenue
Los Angeles, CA (PRWEB) June 23, 2012
Sand, gravel and clay are the essential ingredients for many building products. The Sand and Gravel Mining industry principally mines and undertakes basic processing of sand and gravel used for construction aggregate and industrial applications. The industry also undertakes the extraction and primary processing of clay and refractory products for use in downstream manufacturing applications. The volume of domestic production of sand and gravel is expected to amount to 828 million metric tons in 2012, declining at an average annual rate of 7.9% over the five years to 2012, largely due to the collapse and continued weakness of the US construction market, according to IBISWorld industry analyst Brian Bueno. Revenue is expected to grow 5.9% in 2012 to total $8.2 billion, but it remains far below revenue of $9.7 billion generated in 2007. The slump in downstream construction markets from 2007 through 2009 negatively affected demand for construction aggregates and as materials for building products. Weak demand resulted in a steep revenue drop of 22.4% in 2009 after a fall of 11.1% in 2008. Despite growth between 2010 and 2012, industry revenue is expected to have declined at an annualized rate of 3.2% over the five years to 2012. The dramatic deterioration of housing construction since 2007 reduced demand for a range of building materials. Solid growth conditions in the infrastructure and non-residential building markets partly buoyed the demand for construction materials over the past five years. However, demand from these markets could not sufficiently offset the decline in the housing market and the downstream manufacturing industries.
Over the five years to 2017, Sand and Gravel mining industry revenue is forecast to rise. The demand for clay and refractory materials is projected to continue to deteriorate in several downstream manufacturing industries, Bueno says. However, this will be offset by stronger demand in both the downstream housing market in the latter part of the five-year period and in the highway and bridge construction market as the US economy strengthens. The industry has a low level of concentration, with the four largest players accounting for about a third of industry revenue. Most of the industry is made up of smaller firms, as it is difficult to acquire the vast amounts of capital required to set up a network of facilities serving multiple geographic markets necessary to capture a large market share. More than half of industry establishments employ fewer than 10 people. The leading players in this industry operate multiple establishments across many geographic markets.
Over the five years to 2012, the total number of enterprises is projected to fall. There has been a notable trend toward increased concentration of ownership in the past decade with several medium- to large-scale players acquiring the operations of competitors to establish or strengthen their position in regional markets. This consolidation activity has occurred during periods of relative industry growth, and has been largely confined to mergers and acquisitions rather than industry exit. Therefore, the number of establishments has grown as enterprises have fallen because they were typically acquired by other firms and have remained in operation. The 10 largest companies producing construction sand and gravel (including the operations of the US Department of the Interior's Bureau of Land Management, or BLM) supply almost half of the nation’s sand and gravel.
For more information, visit IBISWorld’s Sand & Gravel Mining in the US industry report page.
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IBISWorld industry Report Key Topics
This industry comprises firms involved in mining and quarrying sand (construction and industrial) and gravel, along with clays, ceramic and refractory minerals. Industry activity may include the beneficiation of these minerals by washing, screening and otherwise preparing the mined sand, gravel and clays.
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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