Industry Analysis & Industry Trends
Metal wholesalers supply the construction market and a wide range of manufacturing industries. These markets were all hit hard by the recession, resulting in a fall in metal wholesaling activity in 2009-10. Metal prices also fell, adding to the decline in revenue. At the same time, the industry found itself with stock acquired during more buoyant times when prices were higher, compressing margins. Conditions remained challenging in 2010-11, although the markets supplied by metal wholesalers picked up during the course of the year and rising metal prices lifted revenue. Demand for metal products is expected to weaken in 2011-12, reflecting subdued economic conditions in the United Kingdom. Metal prices will also retreat from the highs of the previous year... purchase to read more
Industry Report - Industry Investment Chapter
The industry has low capital intensity, as indicated by the high wage-to-depreciation ratio. Although wages are a much more substantial cost than depreciation, both these items are dwarfed by the cost of metal purchases. This cost structure is common in wholesale industries, where material costs are high and value adding is typically fairly low.
Capital intensity varies according to the focus of a firm's operations. Many of the smaller firms are very labour-intensive operations that focus primarily on metal distribution. Larger firms that engage in a greater degree of processing to customer specification are more capital intensive than their smaller counterparts by virtue of a more substantial investment in specialised equipment... purchase to read more