Recovery in residential and nonresidential construction will support industry growth
Los Angeles, CA (PRWEB) March 11, 2013
The Fence and Scaffolding Rental industry ebbs and flows with its downstream construction markets. Nonresidential construction (i.e. offices, retail and entertainment buildings) accounts for almost half of the industry's revenue; municipal, industrial and residential construction and maintenance account for the remainder. “Industry firms are most strongly affected by trends within nonresidential construction and renovation,” says IBISWorld industry analyst Nikoleta Panteva. “When investment in this sector dropped sharply from 2008 to 2010, industry revenue suffered as well, falling in each of these years.” These drastic declines caused industry revenue to decrease at an average annual rate of 1.9% from 2008 to 2013 to an estimated $952.3 million in 2013.
However, recovery is evident in each of the industry's markets. Private investment in nonresidential construction is expected to grow 2.9% during 2013, while residential construction increases 15.7%. As a result, Fence and Scaffolding Rental industry revenue is expected to grow 2.0% during the year. Still, interest rates are set to rise for the first time in six years in 2013, making borrowing more expensive for investors and creating an obstacle to new construction and upgrade projects. This turn of events could work against the industry, limiting its potential revenue growth. Nevertheless, IBISWorld anticipates that industry profit (i.e. earnings before interest and tax) will rebound over the five-year period to 2013. “While margins dropped to a recessionary low in 2008 as buyers opted for lower-priced scaffolding and fencing equipment, an increase in the demand for custom-made solutions has propped up profit since 2011,” adds Panteva.
The industry has a low level of market share concentration. There are a high number of firms that compete on a local and individual project basis, which makes it difficult to build up scale nationally. Major player Harsco Corporation, the largest industry firm, only accounts for a small percentage of industry revenue despite having significant operations in large US markets, including California, Texas, Pennsylvania and Ohio. Overall industry market share concentration declined slightly over the past five years. IBISWorld expects the industry's market share to remain low over the next five-year period due to the nature of industry services and the highly fragmented and competitive industry operating landscape.
A recovery in the construction sector will flow through to the Fence and Scaffolding Rental industry over the five years to 2018. The values of residential and nonresidential construction are projected to rise over the five-year period. As a result, demand for the industry's rental services will increase, supporting projected revenue growth through 2018. For more information, visit IBISWorld’s Fence and Scaffolding Rental in the US industry report page.
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IBISWorld industry Report Key Topics
This industry installs and rents fencing and scaffolding equipment.
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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