Growth in construction will boost industry demand, despite rising competition
Los Angeles, CA (PRWEB) January 26, 2013
The Lumber Wholesaling industry sells lumber, plywood, engineered wood products, door and window frames, wood floors, paneling, roofing and other millwork products to contractors in the residential, commercial and industrial construction markets, and to hardware and home improvement stores. “Residential construction is the largest source of demand for lumber wholesalers,” says IBISWorld industry analyst Sean Windle. “Therefore, with the collapse of the housing bubble in 2007 and subsequent recession, demand for industry products fell significantly.” From 2008 to 2013, revenue is expected to decline at an average annual rate of 2.0% to $83.5 billion. With recent renewed growth in the housing sector, however, demand for industry products has begun to increase. Consequently, revenue is expected to rise 7.5% in 2013.
Despite this recent growth, profit margins for the average lumber wholesaler have remained stagnant. Profitability declined during the recession, but is expected to experience an uptick in 2013, thanks to strong demand and strong growth in lumber prices. “Falling profit margins and fewer sales forced some operators to exit the Lumber Wholesaling industry,” adds Windle. IBISWorld expects the number of industry enterprises to fall at an average annual rate of 0.5% to 5,895 over the five years to 2013. With less participation, employment also declined, falling an average 2.9% per year over the same period to 118,911 workers. The industry has a low level of market share concentration and is highly fragmented, as it is composed of mostly small and medium-size operators. Nevertheless, market share concentration has been on the rise over the past five years, as larger companies partake in acquisition activity.
Over the next five years, the Lumber Wholesaling industry is expected to benefit from a strong recovery in the construction sector. From 2013 to 2018, revenue is projected to rise. Contributing to this growth will be expected increases in new home construction as well as commercial and industrial construction, both of which will be fueled by low interest rates and improving economic conditions. Nevertheless, lumber wholesalers will face increasing competition over the next five years from substitute products, such as concrete, aluminum, steel, fiberglass and vinyl. For more information, visit IBISWorld’s Lumber Wholesaling in the US industry report page.
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IBISWorld industry Report Key Topics
This industry distributes a range of lumber, plywood, millwork and wood panel products to contractors, home improvement stores and hardware stores. The industry does not include wholesalers that distribute nonwood roofing and siding materials, nor does it include establishments that distribute timber and timber products such as railroad ties, logs, firewood and pulpwood.
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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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.