By Gary Thomas
IBISWorld has included a report on the US Organic Chemical Manufacturing industry as it has shown significant growth in the last five years and shows promise of continued growth in the next five years too.
The industry manufactures synthetic dyes, pigments and industrial gases that serve as raw materials for manufacturing in other industries such as paint, plastic and adhesives.
The annual revenue for 2012 is expected to increase by 4.3% to $125 billion. In the five year period leading up to 2012, the industry has expanded in spite of the recession. This is because of increased demand from end users before recession commenced. Recession caused consumer spending to reduce and affected the industry’s key buying sector, the housing and construction sector. Fluctuating raw materials cost combined with increase in oil prices at an annualized rate of 8.5% over the last five years also increased downward pressure on industry margins. But the economic recovery in 2010 fuelled demand for organic chemicals. Though oil prices and government regulations offer limitations to growth, increase in exports, increase in selling prices on the back of increasing demand is expected to increase profitability by 6.5% in 2012.
The Organic Chemicals manufacturing industry has a low level of market concentration because of the low barriers to entry. The contribution of the four major players of this industry in 2012 would amount to less than 5% of total industry revenue. The US Census Bureau records show that 76% of the companies employ less than 100 resources while 46.9% of the companies employ less than 20 resources.