Low demand from both the residential and commercial markets constricted revenue
Los Angeles, CA (PRWEB) August 30, 2013
The Ornamental and Architectural Metalwork Services industry manufactures products used in both residential and commercial buildings. “Demand for industry products sharply contracted over the past five years, as the housing market collapsed and recession set in,” according to IBISWorld industry analyst David Yang. Housing construction activity ground to a halt, with housing starts falling to a 30-year low in 2009. Furthermore, high unemployment and meager income growth limited consumers' willingness to spend money on home renovations, and high economic uncertainty and low credit availability constrained private sector construction expenditures. Industry revenue fell 29.1% in 2009, followed by a 13.6% drop in 2010 as a result of dismal construction activity in the United States. In the five years to 2013, industry revenue is estimated to fall at an average annual rate of 5.6%. Revenue growth has slightly picked up in recent years as the housing market recovered, however, and IBISWorld expects revenue to grow 6.8% in 2013 to total $6.6 billion, though demand remains considerably below prerecession levels.
Operators in the Ornamental and Architectural Metalwork Services industry faced poor profitability during the past five years. The industry's primary raw material inputs (i.e. aluminum and steel) exhibited high volatility during this period: Steel and aluminum prices dropped in 2009 due to the recession but quickly rebounded in 2010 as industrial output picked up. Consequently, rising metals costs and falling downstream demand caused profit to fall significantly in 2011 as a result. “Profitability moderately recovered over the past two years as metals prices dropped,” says Yang. Nevertheless, diminished profit margins caused the number of industry firms to contract at an annualized 1.3% over the past five years. The industry has a low level of market share concentration, as no company is expected to generate more than 5.0% of industry revenue in 2013. Industry operators are typically small, and in order to grow, firms must have a thorough understanding of consumer preferences in their particular region. IBISWorld estimates that industry operators employ an average of 13 people; the majority of these employees provide installation services because manufacturing is becoming more automated.
This industry is expected to return to growth over the next five years, driven by strong recovery in the US housing market. Housing starts are projected to grow significantly over the next five years ad should approach the traditional levels of a healthy housing market. As unemployment falls and income rises, consumers will also be more willing to spend money on home renovations. Meanwhile, strengthening economic growth will bolster private sector construction expenditures. As a result, IBISWorld forecasts that industry revenue will increase in the five years to 2018. Industry profitability will also increase because rising demand will allow firms to more easily pass on costs to customers.
For more information, visit IBISWorld’s Ornamental and Architectural Metalwork Services in the US industry report page.
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IBISWorld industry Report Key Topics
This industry fabricates, sells, repairs and installs ornamental metalwork, including fences, handrails, balcony rails, screen doors, window guards and other architectural products.
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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