Although rising consumer demand is expected to keep the industrys remaining manufacturers afloat over the next five years, the sustained appreciation of the dollar will lead to greater import penetration and declining export sales. For these reasons, industry research firm IBISWorld has updated a report on the Major Household Appliance Manufacturing industry in its growing industry report collection.
New York, NY (PRWEB) April 11, 2014
The past five years have seen the rapid decline of the Major Household Appliance Manufacturing industry. Coupled with weak underlying domestic demand from a recovering housing market and muted disposable income growth, the appreciation of the Canadian dollar caused many of the industrys multinational firms to relocate production abroad. As a result, industry revenue declined precipitously, falling at an annualized 15.4% to $ 606.4 million in the five years to 2014.
While a poor economic climate produced weak demand for household appliances, the appreciation of the Canadian dollar over the period proved disastrous for the industrys manufacturers, according to IBISWorld Industry Analyst Dmitry Diment. In the five years to 2014, the Canadian-dollar effective exchange rate, which measures the value of the dollar relative to currencies used by Canadas main trading partners, is expected to rise at an annualized 0.9%. As a result, household appliances manufactured in Canada became more expensive relative to those manufactured abroad. Because a significant portion of household appliances manufactured in Canada are intended for the United States, the industrys largest export market, many of the industrys largest manufactures decamped for the country. In 2010, the industrys largest firm, Electrolux, announced that it would cease production at its cooking appliances factory by 2013. In 2012, Mabe announced that it would close its dryer manufacturing plant and relocate production to the United States and Mexico by the end of 2014. Finally, in 2013, AO Smith announced that it would close its water heater manufacturing plant, completely discontinuing production within a matter of months. These closures proved insurmountable for the industry, as revenue plummeted an astounding 18.9% in 2013, with a decline of 35.3% expected in 2014.
Although rising consumer demand is expected to keep the industrys remaining manufacturers afloat over the next five years, the sustained appreciation of the dollar will lead to greater import penetration and declining export sales. As rising input prices further reduce the industrys already low profit margins, a small number of surviving manufacturers will compete for niche markets in an increasingly fragmented industry. With the complete exit of Mabe at the conclusion of 2014, industry revenue will continue to plummet, says Diment. IBISWorld forecasts that industry revenue will decline during the five years to 2019.
For more information, visit IBISWorlds Major Household Appliance Manufacturing in Canada industry report page.
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IBISWorld industry Report Key Topics
This industry includes firms that manufacture major household cooking appliances, refrigerators, freezers, household laundry equipment and other major electrical and nonelectrical household appliances such as dishwashers, garbage disposal units, water heaters and trash compactors. Small cooking appliances (e.g. hot plates), fans, vacuums, and electric irons are not included in this industry, as are central or room air conditioners.
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