New report highlights industry recovery.
According to the updated IBISWorld’s Demolition and Wrecking report, the US demolition and wrecking industry has been shaken by tumbling downstream construction and land-development markets during the past five years.
Demolition services are required whenever a residential, commercial or land-development project is scheduled to begin where existing structures still stand; as such, the values of new residential and non-residential construction directly contribute to industry demand. However, land developers who prepare property for sale are generally the primary clients of standalone demolition contractors. All three major sources of revenue for industry companies struggled under the weight of the housing market collapse and ensuing recession during the past five years. As a result, the Demolition and Wrecking industry slumped as well. Industry revenue is expected to fall at an annualized rate of 1.7% during the five years to 2013 to $2.9 billion.
A shrinking pool of contracts to bid for during the past five years has led to intense price competition in which operators underbid one another for projects. As a result, the industry’s average profit margin fell significantly during the recession. And, because smaller contractors are typically unable to sustain lower returns from projects, many exited the industry altogether, having been forced out by the intense price competition.
Since 2011, however, business has begun to pick up, and the Demolition and Wrecking industry is forecast to return to its prerecession size by 2018. In 2013 alone, revenue is expected to grow 6.0% as the value of residential and nonresidential construction increases, which prompts the need for demolition for new structures.
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