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Production Services

Production Services

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Executive summary

The Manufacturing sector comprises companies that transform raw inputs via mechanical, physical or chemical processes into new products, as well as the assembly of component parts into new, complex goods. Sector revenue performance is largely attributable to the value of the US dollar, commodity prices, policy decisions and US manufacturing capacity. Revenue for the Manufacturing sector is anticipated to increase at an annualized rate of 6.6% to $8.8 trillion over the five years to 2022, including an increase of 14.2% in 2022 alone due to recovering domestic and global demand for industry products from COVID-19 (coronavirus) pandemic-induced lows. Industry revenue growth has been decelerated by the estimated 10.0% decline in revenue in 2020 as the coronavirus pandemic and subsequent government closure of nonessential businesses and tepid global demand hampered industry performance. The rise in coronavirus-related costs as well as commodity price volatility is also expected to weaken industry profit during the period.
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Each report includes:

industry revenue;

industry profit;

industry margin;

industry employment;

industry major players;

industry key external drivers;

industry product & structure segmentation;

industry key trends;

industry Life Cycle;

industry Geographic Breakdown;

industry Key Success Factors;

industry Key statistics for previous years;

forecast of industry Key statistics for the next 5 years;

Reference Wordlist

BARRIERS TO ENTRY
High barriers to entry mean that new companies struggle to enter an industry, while low barriers mean it is easy for new companies to enter an industry.

CAPITAL INTENSITY
Compares the amount of money spent on capital (plant, machinery and equipment) with that spent on labor.
IBISWorld uses the ratio of depreciation to wages as a proxy for capital intensity. High capital intensity is more than $0.333 of capital to $1 of labor; medium is $0.125 to $0.333 of capital to $1 of labor; low is less than $0.125 of capital for every $1 of labor.

CONSTANT PRICES
The dollar figures in the Key Statistics table, including forecasts, are adjusted for inflation using the current year (i.e. year published) as the base year. This removes the impact of changes in the purchasing power of the dollar, leaving only the "real" growth or decline in industry metrics. The inflation adjustments in IBISWorld’s reports are made using the US Bureau of Economic Analysis’ implicit GDP price deflator.

DOMESTIC DEMAND
Spending on industry goods and services within the United States, regardless of their country of origin. It is derived by adding imports to industry revenue, and then subtracting exports.

Colloquial Terminology

ECONOMIES OF SCALE
Cost savings enjoyed by larger operators with additional production volumes. Can be attained using factors such as bargaining power with suppliers.

INVENTORY MANAGEMENT
Planning and maintenance of inventory levels, balancing demand and inventory control costs.

OFFSHORING
The process of basing some or all of a company's resources abroad to take advantage of favorable operating costs and expand profit.

Details

Volatility in commodity prices, trade tensions and coronavirus-induced tepid global demand have led the value of industry exports to decline during the current period. Commodity-driven economies are key buyers of US products and volatile commodity prices have hampered demand for sector products. During the current period for instance, the world price of crude oil is expected to increase 54.7% in 2022 and has declined as much as 32.7% in 2020.
However, in 2022 commodity prices have largely recovered from coronavirus-induced lows, boosting revenue for sector operators.

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