top 10 growth industries - and those that are set to crash

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Top 10 growth industries – and those that are set to crash

Robert BryantIBISWorld

Oliver MilmanStartupSmart.com.au

James ThomsonSmartCompany.com.au

WWW.IBISWORLD.COM.AU

Topics

1. The Australian Economy

2. Industries In Perspective

3. New and Emerging Industries

4. Industries to Watch


1.The Australian

Economy


Asia Economyppp terms 2010 (F)

$US 25.8 trillion(35.8% of world GDP)

Source: CIA/ IBISWorld 02/07/10

India15.1%

Other A-P0.8%

NZ 0.7%

H/K 1.3%

Malaysia 0.9%Singapore 1..0%Vietnam 1.1%Philipp 1.3%.Thailand 2.2%

Greater China42.3%

38.0% China

16.9%

Japan

Other Indian S-C

3.3%


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-1

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919

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1968

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72

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1976

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78

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1986

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1994

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96

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98

20

00

2002

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04

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06

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08

2010

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16

2018

20

20

Economic GrowthAnnual real GDP growth (%) progressed in quarters to September 2010 (and forecast to June 2015)

34 qtrs 34 qtrs 33 qtrs 38 qtrs 33 qtrs 36 qtrs ?

Source: IBISWorld: 20/01/11

Average long business cycle is 34 quarters (81/2 years)

Years, ended June

Forecast


The Market EconomyYear to September 2010

Source: ABS/IBISWorld 01/12/10

Gross National Expenditure (GNE)

$1312 billion (current prices)

Consumption Expenditure72.2%

Company CapEx2

Household Consumption

Capital Expenditure

27.8%

1 Mainly on behalf of household2 Incl. inventory change & transfer costs

Govt. CapExGBEs GG


Australian Index of Consumer Sentiment2 months progressive to January 2011

Source: Westpac-Melbourne Institute (IAESR), IBIS estimates 20/01/11

Recession Level

Happy 65% of last 40 years73% of last 20 years


Consumption Expenditure Growth4 qtr moving average to September 2010

Source: ABS: 5206-05 (01/12/10)

-6-5-4-3-2-10123456789

19

60

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62

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64

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66

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Recessions do not occur from collapsing consumption expenditure(mainly households), but from capital expenditure which does goseverely negative every 8.5 years.


Capital Expenditure Growth4 qtr moving average to September 2010

-12

-10

-8

-6

-4

-2

0

2

4

6

8

10

12

14

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181

96

01

96

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41

96

61

96

81

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81

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61

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82

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02

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22

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42

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62

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82

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22

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42

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62

01

82

02

0

Source: ABS5206-06 01/12/10 Years, ended June

Recessions occur whenGFCE falls more than 8%


2.Industries In Perspective


Changing Importance of Australian Industry share of GDP* by industry division

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

18

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80

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80

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Agriculture

Mining

Manufacturing

Utilities

Construction

Wholesale trade

Retail trade

Transport &storage

Communication

Finance &insurance

Prop &business

Dwelling O'Ship

Govt admin

Education

Accom, cafes &rest

Health &community

Cult &recreation

Personal &other

Note: *At market prices to 1940, at factor cost thereafter Source: N.G Butlin, ABS & IBISWorld


Australia’s Industry MixShares of GDP in constant F2009 price terms Year to September 2010

ABS 5206-26 IBISWorld

Agriculture

2.2% Utilities 2.0%

GDP $1292 billion (constant F2009)

Finance & Ins.

Mining

9.5%

O’Ship Dwells. 7.4%7.1% Construction

3.0%

Communications& Media

11.0%Prop. & Business Services

Cult & Rec. Serv.

Pers. & Other Serv.Hospitality

(2.0%)

SectorsPrimarySecondaryTertiaryQuaternaryQuinary

Prof., Scient. & Tech Services 6.1%Rental, Hiring & Real Estate 2.6%Admin. & Support Services 2.3%


Importance of Australian Industries

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

$0.22 trillion (2010 prices) $1.28 trillion

Agriculture

Mining

Manufacturing

Utilities

Construction

Wholesale trade

Retail trade

Transport &storage

Communication

Finance &insurance

Prop &business

Dwelling O'Ship

Govt admin

Ind taxes et al

Education

Accom, cafes &rest

Health &community

Cult &recreation

Personal & Other

Source: ABS/IBISWorld

F1960 F2010

7.8%

8.6%

7.3%

4.5%4.1%4.8%

9.9%

11.6%

7.8%

4.9%

6.8%

4.1%

5.8%

2.1% Agriculture11.0%

28.9%

7.7%

10.8%

5.9%

3.8%

7.0%

Shares of GDP by Industry Division, current prices


3.New and Emerging

Industries


0

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18001

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90

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Australia’s Economic GrowthGDP @ Constant F2008 Prices 1788-2010 (F)

GD

P $

bill

ion

HuntingAge

Agrarian

AgeInfotronics

Age

Industrial Age

Year, ended JuneIBISWorld 17/02/11

An Industrial Age is whenManufacturing, Constructionand Utilities (electricity, gas & water) dominate the economy, that is 30-50%+ of GDP

Agriculture,Mining, Banking,

Commerce

Service industries and IC&THunting,

trapping, fishing,crafts, religion


Fastest Growing Industry ThemesNew Age 1965-2040s

IC&T - the New Age all-pervasive utility.

Business Services - outsourcing non-core functions.

Financial Services - outsourcing of transactions/investment.

Property Services - outsourcing property ownership/services.

Knowledge Industries - databases & multi-media services.

Health - outsourcing home doctoring.

Education - outsourcing pre-school, plus universities.

Personal & Household Services - outsourcing chores.

Hospitality & Tourism - outsourcing the kitchen and travel

Recreation & Cultural Services - outsourcing leisure.

Mining - energy minerals (oil, gas, coal, uranium)

Biotechnology & Nanotechnology - New Age technologies

Environmental Services - testing, assessment, amelioration


Outsourcing Creates Most Industries

We outsourced the growing of things to create the agriculture industry, aided by new technologies

We outsourced the making and building of things to create the industrial age industries of manufacturing and construction, aided by new technologies and utilities.

We are outsourcing services (household services and business functions) to create the current infotronics age from 1965-2040s, aided by new systems & technologies and a new utility sector. These created $ 1 billion in extra revenue pa by 2010


Who Outsources?Who Outsources?

Households (80-90% of all new jobs and GDP) new industries carry out household activities in a quarter of the

time and a third of the (real) cost of the DIY household and improve both our standard of living and our quality of life.

Businesses (no net new jobs ) businesses are now outsourcing non-core activities and franchising,

transferring jobs from one business or industry to another business or industry to be done more efficiently with huge productivity gains.

Other Nations (10-20% of all new jobs and GDP) our exports are the result of other nations outsourcing some of

their needs of goods and services to us.


New Age Industries1965 – 2040s+

Household Outsourcing Hospitality (meals, accommodation)

Entertainment (clubs, casinos)

Household services (everything!)

Personal services (beauty, fitness)

Health (everything!)

Tourism (transport, agencies)

Education (pre-school, tertiary) services)

Child minding (pre-school, nanny services)

Finances (advice, management)

Other services (inc. unmentionables)

Overseas Outsourcing (To Us)

Mining (energy minerals)

Tourism (inbound)

Education (mainly tertiary)

Health Aquaculture (& crustaceans)

Manufacturing (smelted ores)

IP (royalty arrangements)

Business Outsourcing Trucking Facilities management Business services (A/C. legal)

Knowledge services (data, consulting)

Cleaning. Catering HR services (recruitment, staffing).

Security Call Centres/CRM services Operations (via franchising)

New Enabling Utilities (& technologies)

IC&T Nanotechnology Biotechnology Just-in-time systems Self-service systems


Australia has 500 classes of industry in its economy ranging from Grains Growing to Waste Disposal Services.

All such classes of industry have long lifecycles of around 40-60 years, which repeat to form new lifecycles.

IBISWorld charts such industries by their contribution to the GDP (value added share)

Industry Lifecycles


Typical Life Cycle in an Industry (measured as an Industry’s value added share of GDP)


Each new lifecycle brings gradual changes to an industry. It takes until

the top of the new cycle for 60% of the industry’s revenue to reflect

these changes, and the end of the lifecycle to reflect 80% of the new

changes. So it is a slow process. The 5-way changes are:

Products

Customers

Geographic location

Systems & Technology

Ownership (industry enterprises)

The 5-way Changes in A New Lifecycle


0.0000.0200.0400.0600.0800.1000.1200.1400.1600.1800.2000.2200.2400.2600.2800.300

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Source: IBISWorld 18/01/10

2nd Era

Table

Wines

3rd Era

Fortified

Wines

4th Era

Table

Wines

5th Era

?

Wine Industry LifecycleValue added as % of GDP 1890-2007


4.Industries to Watch in 2011 and beyond


Top Growth IndustriesAnnualised growth over 5 yrs to 2013

measured as a percentage of industry revenue

Video Games 14.8Online Education 14.1Organic Farming 13.1Renewable Energy 9.3House Construction 6.2Debt Collection 6.0Takeaway Food Retailing 5.8Physiotherapy Services 5.4Motor Cycle Dealing 5.4Waste Disposal Services 5.3

Source: IBISWorld 28/02/11


Signs of FlightIndustries benefiting from;

Greater disposable household income

Technology enabled growth

Demographic and behavioural change


Organic FarmingOrganic Farming

Premium product – greater disposable income

Social values and behaviour

Lifecycle stage and related characteristics

Volatile industry – climatic impact

Growth 13.1%


Online EducationOnline Education

Technology enabled growth

‘Lifelong learning’ – appeal to a broad demographic

Increasing profitability

Growth 14.1%


Video Gaming

• Technological advancement

• Online social behaviours

• Gamers of all ages

Growth 14.8%


Motor Cycle DealingMotor Cycle Dealing

Dramatic increase in registrations 2005-10

Rising fuel prices

Rising dollar value – competitive pricing

Increased disposable income – the grey haired biker

Growth 5.4%


Takeaway FoodTakeaway Food

Evolving product – health, convenience of ordering

Stable share of household expenditure

Benefit of the substitution effect in tough times

Growth 5.8%


Renewable EnergyRenewable Energy

Government support

Significant technology development

Increasing participation and profit

Downstream opportunities

Growth 9.3%


IndustryRevenue

2011$millions

Decline %

Computer Equipment Manufacturing753 -11.6%

Telecommunication Resellers2,610 -5.5%

Men’s & Boy’s Wear Manufacturing260 -4.2%

Book & Magazine Wholesaling1,504 -3.3%

Video Hire Outlets1,039 -3.2%

Declining IndustriesAnnualised growth over 5 yrs to 2013

measured as a percentage of industry revenue


Gravitational ForcesIndustries feeling influence of;

Overseas competition

Lifecycle stage

Technology threats

Government influence


Summary…

International (regional) demand and opportunity

Private Capital Expenditure driving growth

Business Environment Factors

Industry Lifecycles