The Cabinet and Vanity Manufacturing industry has been severely set back by a prolonged and substantial downturn in the housing construction and home remodeling markets. According to IBISWorld industry analyst Sean Windle, "Homebuilders, architects, designers, retailers and consumers purchase most industry goods during the construction of new houses, or as part of a kitchen or bath remodeling project." Unfortunately for the industry, both of these markets contracted significantly as a result of weak consumer spending and a severe drop in investment into single-family residential construction during and after the recession.
Industry revenue fell 15.6% in 2008 before plummeting an additional 30.3% the following year in 2009. "Falling home prices also dampened consumer spending and the construction of new houses slowed," says Windle. Industry revenue continued to decline in 2010, before finally turning the corner in 2011. Consequently, in the five years to 2013, industry revenue is expected to decline at an average annual rate of 3.5% to $13.9 billion. In response to weakened demand, industry firms have shut down manufacturing plants, slashed jobs and streamlined operations. In the five years to 2013, the number of companies operating in the industry has declined at an estimated average annual rate of 0.2% to 8,893 enterprises. Industry employment is expected to contract at an annualized rate of 3.6% during the same period to 98,980 workers. Industry profit has also been impacted by weak demand and the price volatility of certain commodities and raw materials; however, profit margins are up slightly from 2008 levels, thanks to stronger demand from residential construction markets the past two years.
The Cabinet and Vanity Manufacturing industry exhibits a low market share concentration. In 2013, IBISWorld estimates the four largest industry manufacturers will account for less than a quarter of revenue. The remainder of the market is captured by a large number of small and privately owned businesses that serve local retail markets. In fact, more than 80.0% of industry operators are estimated to have fewer than 10 employees, while fewer than 10.0% of players are expected to have more than 20 employees. Over the five years to 2013, industry concentration has increased, because many firms have been driven out of business. In the wake of the subprime mortgage collapse and subsequent recession, housing construction activity in the United States slowed to a trickle, and with high unemployment and concerns about money, many consumers delayed home remodeling jobs. As a result of these factors, demand for new cabinets and vanities plummeted, eroding industry demand and forcing many manufacturers to exit the industry.
Revenue returned to growth in 2011 and is expected to grow in 2013, as consumer spending grows and the housing market begins to stabilize. IBISWorld forecasts steady growth for the industry in the five years to 2018, with revenue projected to increase. Demographics will play a key role in the demand for housing, as a large segment of the population is gearing up to enter the homeowners market and will encounter a limited inventory of new homes. As more people buy homes, housing starts will accelerate and demand for industry products will increase. Additionally, due to deferred maintenance during the downturn, a significant number of properties will be in need of rehabilitation, which will include upgrades to kitchen cabinetry and bath vanities.
For more information, visit IBISWorld's Cabinet & Vanity Manufacturing in the US in the US 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 includes businesses that manufacture kitchen cabinets, bathroom vanities and countertops primarily made of wood or wood coverings. Manufacturers distribute their products to wholesalers, contract outfitters and home improvement stores in the United States.
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 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.
Read the full story at http://www.prweb.com/releases/2013/2/prweb10390606.htm