As the New Year unfolds, a matter of some curiosity for entrepreneurs and businesses, as much as consumers, is the simple question: What’s going to be hot?
For such prophecy seekers, IBISWorld has come up with its annual, and laboured, report on which industries will fly in 2012, and which will be grounded.
In a surprising turn, the diamond and gemstone mining industry will see a fresh sparkle this year, after five straight years of decline, driven in the main by global factors. In fact, IBISWorld is predicting a huge 36.7% growth for the sector, reflecting a tremendous recovery.
Other sectors that will see a smart uptick are autos and three relatively new but vibrant industries — online education, biotechnology and e-commerce.
Conversely, the industries that are expected to register negative growth are iron and steel, construction, cotton ginning, cut flowers and paper. Iron and steel is likely the biggest loser with a nearly 15% projected decline in revenues.
Here is a snapshot of industries that will fly:
Diamond and Gemstone Mining
For five years, the industry suffered lower volumes and lower prices because of global economic conditions. For an industry that exports 90% of its production, a rising Australian dollar hardly helped. But a sharp rebound is at hand — a 36.7% jump to $599.9 million.
“The revenue rebound will be driven by stabilising prices and higher production levels, which are forecast to increase by 39.5%,” said IBISWorld General Manager (Australia) Karen Dobie.
Motor vehicle manufacturing will grow 14.3% to over $11.9 billion this year but the recovery will only be partial. This is because it still will not regain pre-global financial crisis levels, falling short by $5 billion.
Key drivers for the industry are a more diverse range of products including more environmentally friendly vehicles and a rise in exports for the first time in three years.
IBISWorld expects revenue from Australia’s online education industry to increase by 10.6% in 2012 to just under $4.9 billion.
High-speed Internet services, government support of students, efforts to expand access beyond the typical school-leaver demographic and a wider and increasing acceptance is powering the growth of online education.
“The growing trend towards re-skilling for working adults and lifelong learning for retirees is expected to support continued growth in flexible methods of study, including online education,” Dobie said.
With many Australian companies “approaching commercial readiness,” and receiving increased global investment, IBISWorld expects biotech revenues to grow 10.3% to over $2.4 billion.
IBISWorld expects growth to be driven by “continuing economic uncertainty” as leading “global investors search for low-risk opportunities like commercial-ready technology that Australia has on offer.”
Australia’s steadily rising online shopping industry is expected to grow 10.2% this year to $10.4 billion, still representing only 5% of the total retail sector.
Growth of e-commerce, from $7 billion in 2007, has “been due to consumers becoming more comfortable with shopping online, and more major retailers launching online stores,” Dobie said, listing computer and electrical items as the most common online purchases.
Here is a snapshot of industries that will fall:
Iron and Steel
Weaker global economic conditions and a strong Australian dollar will see exports plunge by more than 45% over the coming year. Overall, the industry will shrink 14.9% to $7.6 billion.
“Domestic demand is simply not strong enough to compensate for the rapid declines in international exports – leading industry players to reduce production levels,” Dobie said.
Also, the introduction of the carbon tax in 2012 will push many producers offshore.
Building & Construction
The Institutional Building Construction industry is expected to decline as governments cut spending on new construction, stimulus spending on the refurbishment of primary schools ends and major current projects are completed. In 2012, industry revenue is expected to fall 9% to $10.3 billion.
Australia’s cotton ginning industry will decline 7.7% decline to $2.5 billion. This decline is mainly because of last year’s high, aided by wet weather. Overall, it will be a return to normalcy with production expected to touch 1,109.5 kilotonnes.
Cut Flower Growing
Flower growers are expected to face another tough year with IBISWorld forecasting industry revenue will fall 4.3% to $297.2 million — nearly half of its value a decade 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,” IBISWorld said.
Pulp, Paper and Paperboard Manufacturing
Australia’s pulp, paper and paperboard industry will fall 3.7% to $3.1 billion, thanks to rapidly expanding use of electronic devices such as tablet computers. It also will be hit by continued high prices of woodchips, eroding the domestic industry’s competitiveness.