Revenue fell only slightly since 2008, but this hides volatile swings into the red
Los Angeles, CA (PRWEB) March 18, 2013
The Lubricant Oil Manufacturing industry produces industrial and automotive lubricants for manufacturers and consumers, including motor oil, transmission fluid, rust inhibitors and machine oils. The industry experienced its share of wear and tear over the past five years, with the economic downturn, which led to a drop in consumer income and downstream manufacturing activity. “These factors compelled consumers to drive less and hold off on car expenses; meanwhile, manufacturers were forced to leave factories idle or exit their industries,” says IBISWorld industry analyst Sean Windle. In addition, the collapse of US automakers, this industry's biggest foreign customer, left a massive void in demand. As a result, industry revenue fell 15.9% in 2009. Fortunately for the industry, improved domestic demand and a surge in export growth fuelled by a revitalized US auto industry pushed revenue growth of 11.4% in 2010. Despite the strong growth post-recession, industry revenue is expected to fall at an annualized rate of 0.1% to $2.33 billion.
Holding the industry back is increasing import penetration, especially from the United States, which accounts for more than three-quarters of imported lubricant oil products into Canada. In 2013, imports are expected to account for 53.5% of domestic demand, up from 45.5% in 2008. Volatile input prices have also negatively affected industry performance, stifling profit growth from 2008 to 2011. Fortunately for the industry, profit margins finally expanded in 2012 and are expected to grow strongly in 2013, thanks to a leveling off in oil prices and strong demand from overseas markets. Despite the recent improvements, industry revenue is forecast to continue its decline in the five years to 2018. According to Windle, increases in domestic demand will largely be consumed by imports, which will continue to capture a greater share of the domestic market. In response, industry manufacturers will continue to shift their focus on foreign buyers. Additionally, while revenue is expected to fall, profit margins will experience a boost over the next five years as growth in oil prices stabilizes, allowing operators to pass on more of the additional costs to customers.
The Lubricant Oil Manufacturing industry is characterized by a medium level of market share concentration, with the top four companies accounting for an estimated 66.7% of industry revenue in 2013. In addition, these companies play a further role within the industry, supplying lubricating oil base-stock to other specialist lubricant manufacturers. Industry concentration has increased over the past five years, with the industry's major global companies acquiring smaller, regional players. For more information, visit IBISWorld’s Lubricant Oil Manufacturing in Canada industry report page.
Follow IBISWorld on Twitter: https://twitter.com/#!/IBISWorld
Friend IBISWorld on Facebook: http://www.facebook.com/pages/IBISWorld/121347533189
IBISWorld industry Report Key Topics
This industry manufactures petroleum products (except for asphalt paving, roofing and saturated materials), such as blended motor oils, brake fluids, lubricating grease and other oil-based additives. Key buyers include downstream automobile manufacturers, wholesalers and automotive retail chains.
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 and Canadian 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.