New York, NY (PRWEB) February 13, 2015
Over the five years to 2015, revenue for the Electrical Equipment Manufacturing industry is expected to increase at an average annual rate of 1.6% to $ 5.2 billion. Both the Canadian and global economic downturns diminished demand for industry products. Industry operators rely on demand from downstream industries in the construction and manufacturing sectors; but when consumer demand dried up, these industries cut back on their purchase orders. Growing import penetration has further added to the industry’s difficulties, according to IBISWorld Industry Analyst Sarah Kahn. Countries like Mexico and China are able to produce similar products at a much lower cost, which, in turn, lowers the price for end-users. In 2015, imports will satisfy a larger portion of domestic demand, which is expected to slow industry revenue growth to 0.4% in 2015.
Electrical equipment manufacturers have responded to the rising threat of import penetration with some consolidation, which has enabled them to cut variable costs, such as labour, and close underperforming manufacturing facilities. Additionally, many manufacturers have taken advantage of technological advancements to increase automation in production processes, says Kahn. Despite these cost adjustments, imports are still expected to satisfy 75.1% of domestic demand in 2015 and 77.3% in 2020. Competitive pressure from imports is expected to keep industry profit margins low over the next five years.
A recovery in the construction and manufacturing sectors will help prop up industry revenue in the five years to 2020; however, this recovery will not be enough to offset ever-increasing import penetration. Furthermore, the fluctuating yet appreciating Canadian dollar will make exports less attractive to the industry’s largest trade partner, the United States, while also making industry products slightly pricier for Canadians. Although industry exports to the United States have increased over the past five years, Canadian exports are making up a smaller percentage of US industry imports, as China’s and Mexico’s low cost goods become increasingly attractive. As a result, industry revenue is expected to increase over the next five years. Due to this slow revenue growth, the industry is only just expected to recover to its prerecessionary level over the next five years, with downstream industries and trade partners finding lower-cost alternatives to the industry’s offerings.
For more information, visit IBISWorlds Electrical Equipment Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry manufactures power, distribution and specialty transformers; electric motors, generators and motor-generator sets; switchgear and switchboard apparatus; relays; and industrial controls. Electrical equipment manufacturers distribute their products to other manufacturing industries and to wholesalers and the construction industry.
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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