Iron and steel manufacturing
Weaker global economic conditions and a strong Australian dollar will see exports of iron and steel decline by more than 45% over the coming year. IBISWorld expects revenue for iron and steel manufacturers to fall by 14.9% in 2012.
Domestic demand is simply not strong enough to compensate for the rapid declines in international exports – leading industry players to reduce production levels. BlueScope’s decision to exit the export market and the closure of two blast furnaces at its Port Kemble steelworks facility is indicative of the challenges facing the industry.
The introduction of the carbon tax in 2012 will provide a motive for many producers to move some or all of their manufacturing offshore to avoid higher tax rates, resulting in lower production and revenue – despite the protection of government assistance packages, which will shield industry participants from the full effects of the carbon tax for the first two to three years.
Institutional building construction
The institutional building construction industry mainly constructs buildings where Australians learn, work, heal, socialise, exercise, pray and seek justice. Industry revenue is expected to decline as governments cut spending on new construction and major projects come to completion. The end of stimulus spending on the refurbishment of primary schools will also pull revenue lower. In 2012, industry revenue is expected to fall by 9% to reach $10.3 billion.
The majority of work in the institutional building market is undertaken by private contractors and funded by the public sector. When funding falls away, so too does revenue.
Cotton ginning
Australia’s cotton ginning industry is expected to return to more standard production levels in 2012, following an extraordinary year in 2011. IBISWorld forecasts this will result in a 7.7% decline in industry revenue.
While the wet weather in 2011 played havoc with most agricultural industries, it was just what the cotton industry needed – with lint production reaching 1,144 kilotonnes and revenue reaching $2.7 billion.
Although down on last year, 2012 will still be a good year overall for cotton ginners, with production expected to reach 1,109.5 kilotonnes, and industry revenue forecast to be $2.5 billion.
Cut flower growing
Following a decade of decreasing sales and revenue, flower growers are expected to face another tough year in 2012 with IBISWorld forecasting industry revenue will fall 4.3%.
Worth $456.4 million in 2002, Australia’s cut flower growing industry is expected to earn just $297.2 million in 2012 – almost half its value 10 years ago.
The industry has experienced a restructuring of its customer base with an increasing percentage of production being sold through supermarkets and convenience stores rather than florists. Cut flowers are also a highly discretionary item and conservative spending is expected to keep demand weak through 2012.
Pulp, paper and paperboard manufacturing
Australian pulp, paper and paperboard manufacturers will struggle to remain relevant as more Australians trade-in printed books and other documents for iPads and eReaders, affecting demand for industry products. IBISWorld forecasts industry revenue will fall 3.7% over the coming year.
Australian paper producers have been battling for some time now against foreign producers that have significant cost advantages. The price of woodchips is expected to continue to remain high in 2012 – resulting in continuing high prices for printed materials. This will be an additional reason for consumers to go electronic.
Delays in the development of a number of key production sites such as the Gunns mill in Bell Bay, Tasmania and the Protavia mill in Penola, South Australia have also dented industry productivity.
For more information on these, or any of Australia’s 500 industries, log on to www.ibisworld.com.au, or follow IBISWorldAU on Twitter.
