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 570 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.

Competition from Private Label Products

The commodity-like nature of many hardware products, like hinges and basic locks, creates ripe opportunity for private label goods and low-priced imports since the differences in quality are marginal.

Variable Raw Material Costs

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

Industry size & Structure

The average hardware manufacturer employs about 50 workers and generates about $15 million annually.

    • The US hardware manufacturing industry consists of about 570 companies that employ about 30,000 workers and generate between $8 billion and $9 billion annually.
    • The industry is highly concentrated; the top 50 companies account for over 80% of industry revenue.
    • Large firms, which include Allegion, Spectrum Brands, and The Hillman Group, may offer a portfolio of related products.
                                  Industry Forecast
                                  Hardware Manufacturers Industry Growth
                                  Source: Vertical IQ and Inforum

                                  Recent Developments

                                  Nov 10, 2022 - Lowe’s to Exit Canada
                                  • Lowe’s – the US’s second-largest hardware retailer behind Home Depot – in November agreed to sell its Canadian division, Lowe’s Canada, to US private equity firm Sycamore Partners for $400 million in cash. Lowe’s exit from Canada, where it operates about 450 corporate and independent affiliate dealer stores under various banners including RONA, Lowe's Canada, Réno-Dépôt, and Dick's Lumber, signals a shakeup in the Canadian hardware sector. Lowe’s entered Canada in 2016 with the purchase of RONA but sustained deep losses there. Previously, the company sold its much smaller retail operation in Mexico in 2018. Lowe’s chairman said "The sale of our Canadian retail business is an important step toward simplifying the Lowe's business model,” and gives the hardware retailer the opportunity to focus on its core US retail business. The sale is expected to close in 2023.
                                  • Tool and appliance manufacturer Bosch in November 2022 launched production of electric motors at its South Carolina manufacturing facility, Hardware + Building Supply Dealer reports. The company, which is growing its electrification business in North America and around the world, announced the investment of $6 billion dollars in electromobility development and said that in 2021 its global orders for electromobility surpassed $10 billion dollars for the first time. Moreover, Bosch said it plans to invest more than $260 million to further expand production of electrification products at the site, which is expected to create at least 350 net new jobs by 2025.
                                  • Fannie Mae’s Home Purchase Sentiment Index (HPSI) decreased 1.2 points in September 2022 to 60.8, its seventh consecutive monthly decline, amid growing affordability constraints. In September, only 19% of consumers indicated that it’s a good time to buy a home – down from 22% the prior month – while 59% indicated that it’s a good time to sell. Year over year, the full index is down 13.7 points. “The HPSI declined this month to its lowest level since October 2011,” said Fannie Mae Chief Economist Doug Duncan. “Consumers’ expectation that home prices will decrease matched a survey high, with a higher percentage of consumers believing home prices will decrease rather than increase over the next year – a shift in survey sentiment that had previously only happened in 2011 and at the start of the pandemic in 2020.” A decline in home sales – especially new home sales – negatively impacts sales of home hardware.
                                  • Growth in spending by homeowners for improvements and repairs – an driver of demand for home hardware – is expected to soften during the first half of 2023, according to the Leading Indicator of Remodeling Activity (LIRA) by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. Year-over-year gains in remodeling expenditures to owner-occupied homes are projected to decelerate from 17.4% in 2022 to 10.1% by the second quarter of 2023, according to the LIRA. Steep slowdowns in homebuilding, retail sales of building materials, and renovation permits all indicate a cooling environment for residential remodeling, according to the Remodeling Futures Program. However, spending for home improvements and repairs is expected to remain well above the market’s historical average of 5%, with remodeling expenditures still set to expand to nearly $450 billion in the first half of 2023.
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