by Brianna Crandall — October 22, 2014—In the plastering and drywall services market, prices are rising rapidly and most substitutes are unviable, which is bad news for buyers. For these reasons and to help procurement professionals make better buying decisions faster, business intelligence firm IBISWorld has updated a report on the procurement of Plastering and Drywall Services in its growing collection of procurement category market research reports.
As construction activity continues, the price of plastering and drywall services is forecast to grow, according to the report. Plastering and drywall services have a buyer power score of 1.7 out of 5. According to IBISWorld procurement analyst Ian Buchanan, “This score represents weak buying power resulting from rapidly increasing prices and a low availability of practical substitutes.” Low market share concentration, however, provides buyers with a bit of negotiation leverage.
Recent price trend
Over the three years to 2014, the price of plastering and drywall services has risen rapidly at an annualized rate of 15.5 percent while, at the same time, remaining highly volatile. Extreme variability in price hurts buyers because it means that there is a high risk of prices undergoing significant swings, explains ISISWorld. As such, buyers can have a difficult time creating cost estimations and budgets.
Due to improving economic conditions, the construction sector has experienced a boom in activity during this period. Consequently, residential and nonresidential construction markets have increased their demand for plastering and drywall services. As a result, suppliers have felt reduced pressure to lower prices to remain competitive, and buyer power has decreased. In addition, gypsum building materials such as drywall and plasters, which are the primary input costs for suppliers of this service, experienced accelerated price growth during this period.
Total cost of ownership
The total cost of ownership for drywall installation and plastering services is generally low; installation and finishing costs are the main cost categories that buyers will face. However, total ownership costs will increase as a result of acquisition, site preparation, repair and maintenance, waste disposal and clean up, delivery, insurance and warranty costs, warns the report, reminding readers of the importance of proper site preparation.
Alternatives
According to the report, the lack of practical substitutes to plastering and drywall services further hampers buying power. There are multiple alternatives to using plaster and drywall, but these substitutes will often result in much higher costs. Armed with the knowledge that buyers have a limited number of options, suppliers gain pricing leverage, and buyer power is reduced.
Suppliers/competition
The market, however, has a large number of suppliers with no major player controlling significant market share, so vendors are highly competitive. The high level of competition forces suppliers to offer incentives and bid down competitors to try to secure contracts, slightly uplifting buying power. The largest players in the market are KHS&S Contractors, Performance Contracting Group, Precision Walls Inc., and Standard Drywall Inc.
For more information, visit IBISWorld’s Plastering and Drywall Services Procurement Research Report Web page.
