Rising incomes and housing starts will fuel consumer demand for washers and dryers
Los Angeles, CA (PRWEB) June 20, 2013
The Washer and Dryer Manufacturing industry has contracted over the past five years. Demand for washers and dryers is directly tied to the number of new households formed each year. As such, domestic demand for industry products contracted in 2008 and 2009 due to the housing market collapsing following the subprime mortgage crisis. High unemployment from the recession resulted in stagnant disposable income growth and deteriorating consumer confidence in the economy. Consumers became less willing to purchase durable products like washers and dryers, which constrained industry demand. As a result, in the five years to 2013, industry revenue is expected to fall at an annualized rate of 3.6% to $3.7 billion, says IBISWorld industry analyst David Yang. In 2013, revenue is estimated to increase 1.6% as the housing market recovers. Industry firms have faced heavy competition from imports over the past five years, which has pressured profitability. Although imports fell at an annualized rate of 0.4% over the period, imports' share of domestic demand has increased. With stagnant disposable incomes, consumers were especially attracted to cheap imported washers and dryers over the past five years. In response to import competition and poor domestic demand, industry firms restructured manufacturing operations. Larger firms shut down facilities, while smaller firms exited this industry. In the five years to 2013, the number of enterprises is expected to fall an average of 12.9% per year, while employment is estimated to decrease at an annualized rate of 6.7%. Falling wage costs and industry consolidation is expected to boost profit margins over the period, but the majority of the growth is a recovery from the recession, continues Yang.
The Washer and Dryer Manufacturing industry exhibits a high degree of market share concentration. The top four companies are General Electric Company, Whirlpool Corporation, AB Electrolux and LG Electronics. All account for large proportions of revenue and are expected to continue doing so. The industry became increasingly concentrated in 2006 when Whirlpool acquired one of its key competitors, Maytag Corporation. Consolidation has led market share concentration to increase over the past five years. During the period, smaller players left the industry because they were unable to compete with large firms that operated with economies of scale, allowing them to price their products more competitively. Barriers to entry are high in the industry, so it is unlikely that new operators will enter and attempt to capture market share from existing players.
In the five years to 2018, disposable income and housing starts are projected to grow strongly, fueling consumer demand for washers and dryers. However, the dollar will appreciate, boosting import growth. The price of plastic materials, a major input cost for industry operators, is also expected to increase, which will put pressure on profitability. Nevertheless, improving manufacturing efficiency will slightly bolster profit margins over the next five years. For more information, visit IBISWorld’s Washer and Dryer Manufacturing in the US industry report page.
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IBISWorld industry Report Key Topics
Companies in this industry manufacture household-type clothes washers and dryers.
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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