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Adam Anderson

Strong growth forecast for housing and biotechnology industries

by Adam Anderson | Dun & Bradstreet Editor

April 26, 2012 | No Comments »

Demand for pharmaceuticals, and their raw materials, will be driven by aging baby boomers

Residential construction contractors and the makers of manufactured homes and biological products are among the US industries expected to see strong annual revenue growth rates of 8 to 10 percent through 2015, according to updated industry forecasts available now in industry content on Hoover’s and First Research

The numbers represent annual compounded revenue growth of US establishments, due to increases in production volume and unit prices, for 2012 through 2015. The forecasts, based on data from INFORUM Interindustry Economic Research Fund, Inc. (IERF) in College Park, Maryland, provide insight into the market climate facing your customers.

Residential Construction Contractors

The recovery of the housing and construction sectors will drive more work to residential construction contractors, which will result in an annual compounded growth rate of 10 percent between 2012 and 2015. Although residential construction spending is currently modest, a substantial acceleration is expected as the economy improves and could accelerate further after 2015. A stronger US economy, growing population, and low interest rates will drive residential construction, and more access to credit will spur homeowners to get started on home improvement projects they had delayed for years.

Manufactured Home Manufacturing

The growing ranks of prospective home buyers seeking significant savings in money and time for a newly constructed home will find manufactured construction appealing, with revenues growing at an annual compounded rate of 8 percent through 2015. Technological advances have enabled manufacturers to increase the square footage of modular homes, with the average modular home approaching 2,000 square feet with three bedrooms. The wait for buyers is only five months from start to building completion.

Biotechnology Product Manufacturing  

As the nation’s baby boomers continue to age, the demand for pharmaceuticals, as well as their raw material inputs, the biotechnology products industry should see revenue grow at a compounded annual rate of 9 percent between 2012 and 2015.  Additionally, portions of the 2010 federal stimulus package continue to support growth in biotechnology industries. Industry consolidation will boost the profits of large biotechnology companies, which will acquire smaller ones. However, barriers to entry will be tough for small companies due to steep startup costs and government regulation.

Industries that are struggling include:

Data Storage Systems Manufacturing

Although more people than ever are using data storage devices, domestic production is expected to decline contributing to an annual compounded growth rate of 1 percent between 2012 and 2015.  Furthermore, the relative strength of the dollar will drive demand for less expensive foreign goods. Imports of foreign data storage devices should outpace exports, weakening domestic growth.

Tobacco Manufacturing

Slumping demand in the US and heavy government oversight of the tobacco industry are responsible for a tempered compounded annual growth rate of 1 percent through 2015. The national smoking rate is just half what it was in the 1960s, when the habit represented sophistication and class.  Now, the typical smoker is perceived to be poorly educated and indifferent to health dangers, both undesirable traits.  Volatile raw material costs are also eating into profit margins.

Moving Services

The moving industry is highly vulnerable to fuel costs, which are expected to increase over the forecast period, resulting in an annual compounded growth rate of 1 percent between 2012 and 2015.  The cost pressures, coupled with the competitive nature of the industry, results in many operators barely breaking even.  Moving services companies are also dependent on home sales, which have been in the gutter but are expected to improve along with the economy.

To learn more about which industries are forecast to grow and which are expected to experience weaker growth through 2015, please see the Industry Forecast and Rating section in any of our First Research industry profiles.  Please click the Contact Us button on the home page and complete the form.

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