Hardware Manufacturers

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 540 hardware manufacturers in the US primarily produce metal hardware, including hinges, handles, brackets, keys, and locks. Firms typically develop and engineer products and systems designed for specific applications, such as aircraft, appliances, motor vehicles, or construction. Large firms produce related products like tools and electronic security products. Other related products include nuts, bolts, screws, rivets, washers, nails, and spikes.

Private Label Competition

The commodity status of many hardware products like hinges and basic locks creates ripe opportunities for private-label goods and low-priced imports as differences in quality are marginal.

Variable Material Costs

The cost of raw materials for hardware products, which include steel, zinc, and brass, can vary and affect margins and cash flow.

Industry size & Structure

The average hardware manufacturer employs about 54 workers and generates about $18.5 million annually.

    • The US hardware manufacturing industry consists of about 540 companies that employ about 29,075 workers and generate between $9 billion and $10 billion annually.
    • The industry is highly concentrated; the top 50 companies account for about 80% of industry revenue.
    • Large firms, which include Allegion, TriMark Corp, and The Hillman Group, may offer a portfolio of related products.
                                  Industry Forecast
                                  Hardware Manufacturers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Oct 23, 2023 - Flat Producer Prices
                                  • Producer prices for hardware manufacturers ticked up in August compared to a year ago, but are flat year to date. Overall employment by hardware, spring, and wire product manufacturers decreased in July year over year and remains below pre-pandemic levels. Meanwhile, average wages at fabricated metal products manufacturers continued their steady climb in August topping $25 per hour, an increase of more than 7% over two years.
                                  • Spending on home improvement projects and repairs is expected to decrease at a “moderate rate,” according to the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University (JCHS). The latest Leading Indicator of Remodeling Activity (LIRA) report, which provides a short-term outlook of national home improvement and repair spending for owner-occupied homes, projects a bigger slowdown in home improvement spending than was forecast in July. The report expects annual owner expenditures for home updates and maintenance to decline by 7.7% through Q3 2024, depressing demand for building materials and home hardware. “The level of annual spending on improvements and repairs is projected to fall from $489 billion today to $452 billion over the coming four quarters,” says Abbe Will, associate project director of the Remodeling Futures Program. In October, the National Association of Home Builders reported that remodeler confidence had decreased in Q3.
                                  • The pandemic-induced rebound in US manufacturing has stalled, The New York Times reports. Activity in the US manufacturing sector contracted again in July for the ninth month in a row, following 28 months of growth, according to the latest Manufacturing Report from the Institute of Supply Management (ISM). The July Manufacturing Purchasing Managers Index (PMI) registered 46.4, 0.4 percentage points higher than the 46 percent recorded in June. The New Orders, Production, Employment, and Backlogs indexes all showed contraction in July. “The US manufacturing sector shrank again, but the uptick in the PMI indicates a marginally slower rate of contraction,” noted the Chairman of the Institute for Supply Management Timothy R. Fiore adding, “The July composite index reading reflects companies continuing to manage outputs down as order softness continues.”
                                  • Bipartisan legislation to strengthen and expand the low-income housing tax credit (LIHTC) was reintroduced in May in both houses of Congress, HBS Dealer reports. The LIHTC is the nation’s most successful tool for encouraging private investment in the development and preservation of affordable housing. The Affordable Housing Credit Improvement Act (AHCIA) of 2023 (S. 1557 and HR 3238) would restore the 12.5% LIHTC cap increase that expired in 2021 and further increase allocations by 50% over two years. It’s estimated it would finance an additional 1.94 million affordable rental units over 10 years. Since its enactment in 1986, the LIHTC has financed more than 3.7 million affordable homes, according to the National Lumber and Building Material Dealers Association, which notes that very little affordable rental housing development would occur without it.
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