Following on from last weeks article, today we are looking at some of the manufacturing sectors that are shrinking in 2020. Although many manufacturing sectors are feeling the squeeze, we looked for the ones that were facing sizable drops in revenue for this year.
All data in this article comes from IbisWorld reports.
Between 2016 and 2021 the annual growth of revenue for the sector is expected to be -6.1% with profits decreasing by 9.4%. The past 5 years have seen both revenue and profitability face volatile peaks and troughs due to changing consumer preferences and poor exchange rates. Long-term decline in alcohol consumption has been driven by health consciousness with industry performance being supported by increased whiskey and gin demand.
Covid-19 has had a large impact on the spirit production industry in the UK, from slowing demand overseas to closed pubs resulting in lower sales. This has taken its toll on the industry, with revenue expected to drop by a massive 33.8% in the current year.
Primary Form Plastics
Between 2016 and 2021 the annual growth of revenue for the sector is expected to be -1.2% with profits decreasing by 15.8%. Strong demand from downstream manufacturing and construction markets has helped the industry perform well over the past five-year period. This has helped offset input price fluctuations of petroleum, a key input for many industry products.
A slump in industry output this year caused by Covid-19 has been coupled with reduced demand from the industrial sector. As a result of this, revenue for the industry is expected to take a 14% hit this year.
Light Metal Packaging
Between 2016 and 2021 the annual growth of revenue for the sector is expected to be -3.1% with profits decreasing by 5.7%. The industry has faced headwinds over the past five years due to economic uncertainty which has hit consumer confidence and spending on downstream products.
Light metal packaging was already losing market share in many food and drink packaging markets and Covid-19 has only added to this pressure. With downstream firms temporarily halting production, revenue is expected to fall by 9.8% this year.
Paper and Paperboard
Between 2016 and 2021 the annual growth of revenue for the sector is expected to be -5.3% with profits decreasing by 13.3%. Due to the increasing adoption of computers and other communication technology, the paper and paperboard manufacturing industry has had a rough decade. Many leading manufacturers have left the industry with those remaining consolidating by purchasing smaller businesses.
This year has seen major disruption to downstream demand, such as newsprint, due to Covid-19. International trade has also taken a large hit as supply chain issues and trade restrictions have taken a toll on the industry. This has led to an expected revenue decline of 8.3%.
Meat Product Manufacturing
Between 2016 and 2021 the annual growth of revenue for the sector is expected to be -3.6% with profits decreasing by 29.9%. These sharp drops are from a combination of factors, such as depreciation of the pound, inflationary pressures, and downward pricing pressures.
The already downwards trend has been made worse due to the effect that Covid-19 has had on demand from wholesalers and the food-service industry. This has led to revenue for the industry expected to drop to 7.4% for the current year.