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Amy Schein

Industry Lowdown: Manufacturing Sector

by Amy Schein | Dun & Bradstreet Editor

June 6, 2016 | No Comments »

Our D&B First Research editorial team compiles the latest industry tidbits to give professionals a deal-making edge. Sales reps that spend 15 minutes reviewing industry talking points can glean extra insight into a potential client’s business and be better equipped to close a sale.

Take a look at some of the trends and opportunities from industry profiles in the Manufacturing Sector recently updated by D&B First Research editors:

Trend: Demand for Low-Cost Devices Drives Smartphone Sales — Global smartphone sales grew nearly 4% in Q1 2016 versus the same period in 2015, driven by demand for low-cost 4G smartphones in emerging markets, according to data from market research firm Gartner. This growth driver has played to the strengths of emerging brands rather than market leaders, resulting in the world’s top two smartphone makers — Samsung and Apple — losing market share to Chinese manufacturers Huawei and Oppo. Apple’s market share shrank from 18% in the first quarter of 2015 to about 15% in the first quarter of 2016, and Samsung’s market share declined from 24% to 23% during the same period. Huawei took an 8% market share in Q1 2016, up from about 5% in Q1 2015, and Oppo took a nearly 5% market share, up from 2%.

To learn more about this and other industry trends, see our Telecommunications Equipment Manufacturing report.

Trend: Rising Plastics Capacity Could Hinder Margins — Increased production capacity in the US, China, and the Middle East is expected to create a global surplus of polyethylene and polypropylene, according to analysis released in May 2016 by market research firm IHS. Between 2015 and 2020, IHS expects more than 24 million metric tons of new polyethylene capacity to come on line, more than 30% of which is expected to come from the US. The spike in plastics feedstocks derived from shale gas has increased the competitiveness of the US, especially relative to the Middle East, which historically has been the industry’s low-cost producer. Supplies from China also are surging, due to recent additions of coal-to-olefin production capacity. Although a surplus of global polyethylene and polypropylene resins will mean reduced prices for plastics product converters, it will likely result in tighter margins for resin producers. Polyethylene and polypropylene are two of the world’s most widely used commodity plastics and are used in numerous applications, including containers and packaging, bags, toys, and appliance and automotive parts.

For more insight into the Plastic & Rubber Product Manufacturing industry, see our report.

Trend: Use of Smart Sensor Technology Increasing — Medical equipment makers are beginning to use sensor technology to improve the usefulness, quality, and reliability of products. One example is a smart sensor designed to determine whether medical equipment hosing is in stable working condition and predict failure weeks in advance. These kinds of devices could help hospitals reduce the risk of an adverse event, according to Becker’s Hospital Review. Surgical instruments can also be equipped with smart sensors to allow for automation; one research team has successfully tested a robotic surgical device that can perform suturing of soft tissue as well as or better than surgeons by using 3-D imaging and a near-infrared sensor. Existing sensor-equipped devices such as walking sticks that detect obstacles are undergoing improvements in effectiveness, usability, and affordability. Other areas of focus include infection detection equipment and wearable patient monitors. Advances in sensor technology allow for integration into a wider variety of products.

For more insight, see our Medical Equipment & Supplies Manufacturing industry report.

Opportunity: Single-Family Housing Poised for Growth — US single-family housing production, a leading demand indicator for lumber and plywood product manufacturers, is expected to increase 14% in 2016 compared to the previous year, according to an April 2016 forecast by the National Association of Home Builders (NAHB). The NAHB forecasts that single-family housing production will grow by 20% in 2017. The US housing market is expected to benefit from key demand drivers including steady job growth, favorable mortgage interest rates, and affordable home prices. The NAHB forecast also expects 2016 to be the first year of the US economic recovery when single-family production will outpace multifamily. Despite improving demand conditions, housing growth may be hindered by supply-side challenges including tight lending conditions for acquisition, construction, and development loans, along with shortages of construction lots and labor.

For more insight, see our Lumber & Plywood Product Manufacturing industry report.

Challenge: US Construction Machinery Shipments, Orders Drop — US shipments of construction equipment declined more than 24% in the first two months of 2016 compared to the same period in 2015; new orders fell 12%. In April 2016, Caterpillar, the world’s largest construction machinery manufacturer, reduced its full-year guidance for profit and revenue. Other top equipment makers, including Komatsu and Hitachi Construction, have offered similar financial warnings. The industry has been hard hit by an ongoing slowdown in demand from China, and weak global commodity markets have reduced demand for machinery used in mining. In the US a glut of used machinery has put downward pressure on demand for new equipment, according to The Wall Street Journal. In addition to waning demand in China, Japanese equipment manufacturers are challenged by a stronger yen, which makes exports less competitive.

For more insight, see our Construction Machinery Manufacturing industry report.

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Amy Schein is an Industry Specialist at First Research, where she covers various aspects of the media industry. She earned her BS and MA in media studies at the University of Texas at Austin. Follow Amy on Twitter.

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