Over the last five years to 2013, the Screw, Nut and Bolt Manufacturing industry has contended with slowed productivity, rising demand for imports and increasing price competition. However, the continued recovery of key manufacturing industries from the latter part of the past five years is expected to foster revenue growth of 2.3% in 2013. Additionally, this surge in production will help profit margins rise, says IBISWorld industry analyst Antonio Danova. Still, this recent uptick was not enough to return revenue back toward growth. As a result, industry revenue is expected to decline at an annualized rate of 0.9% to $26.5 billion.
The industry relies on manufacturers and construction markets to buy its products. For example, the housing market's contraction resulted in less need for fasteners. Similarly, the aircraft industry uses precision products to bind engine components and attach parts to a plane's airframe. The aircraft industry endured slow demand from 2008 to 2010 and reduced its purchases of fasteners.
Additionally, major household appliances and similar products, which together constitute the bulk of industry revenue, experienced declines in demand throughout the recession. Consumers curtailed purchases of appliances, forcing manufacturers to slow production. Because of the segment's size and variety, its decline in production directly hurt demand for fasteners.
As the economy turned a corner in 2010, production in these markets grew, creating much-needed demand for fastener manufacturers. IBISWorld estimates that the largest player in the Screw, Nut and Bolt Manufacturing industry is Precision Castparts Corp.
The wide variety of products manufactured in this industry as well as the diverse buying markets makes it difficult for individual operators to grab a large portion of industry market share. Over time, the industry's concentration has been increasing, albeit slowly, says Danova. Precision Castparts' acquisition of Fatigue Technology indicates that companies are making a concerted effort to increase profitability by claiming larger portions of market share. The rapid growth in industry demand over 2010 and 2011 presented some opportunity for new entry and expansion. Over the next five years, IBISWorld expects that larger operators will capitalize on mergers and acquisitions that will increase their market presence, thereby increasing total industry market share.
Over the next five years, higher production levels will yield rapid growth, but increasing external pressures may slightly offset growth. For example, heavier globalization will occur, with trade activity increasing across the industry's product segments. Imports are forecast to grow as demand for cheaper foreign goods from domestic consumers rises. To combat increasing imports, fastener manufacturers will increasingly shift toward precision turned products, a specialized segment that foreign operators have yet to enter. Additionally, dynamic activity from downstream markets in the early stages of the period will be slowed as manufacturing production in several industries levels off. Still, despite such pressures, fastener manufacturers will innovate a strategy to help match customer demand for their products. As a result, industry revenue is expected to grow over the five years to 2018.