As Australian operators prepare for the year ahead, IBISWorld unveils its annual list of the top five industries set to soar in 2012, and the five expected to sink.
Industries to fly
Diamond and gemstone mining
As over 90% of Australia's diamond production is exported, the industry is highly dependent on global economic conditions. After five consecutive years of decline due to lower production levels, lower global prices and a rising Australian dollar, Australia's diamond and gemstone mining industry is expected to rebound in 2012 – with industry revenue forecast to increase by 36.7% to reach $599.9 million.
The revenue rebound will be driven by stabilising prices and higher production levels, which are forecast to increase by 39.5%.
Motor vehicle manufacturing
Motor vehicle manufacturing will grow by 14.3% to reach over $11.9 billion in the coming year as the industry continues to recover from the global financial crisis.
However, revenue is still expected to fall $5 billion shy of pre-financial crisis levels. The provision of a more diverse range of products and more environmentally friendly vehicles will be key factors in assisting domestic growth.
The value of exported vehicles is forecast to return to growth for the first time since 2009. This will be paramount to the growth of the industry, as the domestic market will struggle to support multiple large car manufacturers.
Online education
IBISWorld expects revenue from Australia's online education industry to increase by 10.6% in 2012, to be worth just under $4.9 billion. Growth has been supported by the continued uptake of high-speed internet services, growing acceptance of online education, government financial support of students and efforts to expand access beyond the typical school leaver demographic.
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.
Biotechnology
With many players in Australia's biotechnology industry approaching commercial readiness and receiving increased global investment, IBISWorld expects revenue to grow by 10.3% over the coming year to reach over $2.4 billion.
While most biotechnology firms are currently not profitable due to their research and development intensity, continuing economic uncertainty will drive growth as leading global investors search for low-risk opportunities like commercial-ready technology that Australia has on offer.
Online shopping
While many bricks-and-mortar retailers have reported a tough year, Australia's burgeoning online shopping industry has gone from strength to strength. IBISWorld expects this to continue in 2012, forecasting growth of 10.2% to reach revenue of $10.4 billion – representing about 5% of the total retail sector.
Growing from just $7.0 billion in 2007, the industry has experienced significant growth over the past five years. This has been due to consumers becoming more comfortable with shopping online, and more major retailers launching online stores with computer and electrical items as the most common online purchases.
Industries to fall
Iron and steel manufacturing
Weaker global economic conditions and a strong Australian dollar will see exports of iron and steel decline by more than 45% over the coming year. IBISWorld expects revenue for iron and steel manufacturers to fall by 14.9% in 2012.
Domestic demand is simply not strong enough to compensate for the rapid declines in international exports – leading industry players to reduce production levels. BlueScope's decision to exit the export market and the closure of two blast furnaces at its Port Kemble steelworks facility is indicative of the challenges facing the industry.
The introduction of the carbon tax in 2012 will provide a motive for many producers to move some or all of their manufacturing offshore to avoid higher tax rates, resulting in lower production and revenue – despite the protection of government assistance packages, which will shield industry participants from the full effects of the carbon tax for the first two to three years.
Institutional building construction
The institutional building construction industry mainly constructs buildings where Australians learn, work, heal, socialise, exercise, pray and seek justice. Industry revenue is expected to decline as governments cut spending on new construction and major projects come to completion. The end of stimulus spending on the refurbishment of primary schools will also pull revenue lower. In 2012, industry revenue is expected to fall by 9% to reach $10.3 billion.
The majority of work in the institutional building market is undertaken by private contractors and funded by the public sector. When funding falls away, so too does revenue.
Cotton ginning
Australia's cotton ginning industry is expected to return to more standard production levels in 2012, following an extraordinary year in 2011. IBISWorld forecasts this will result in a 7.7% decline in industry revenue.
While the wet weather in 2011 played havoc with most agricultural industries, it was just what the cotton industry needed – with lint production reaching 1,144 kilotonnes and revenue reaching $2.7 billion.
Although down on last year, 2012 will still be a good year overall for cotton ginners, with production expected to reach 1,109.5 kilotonnes, and industry revenue forecast to be $2.5 billion.
Cut flower growing
Following a decade of decreasing sales and revenue, flower growers are expected to face another tough year in 2012 with IBISWorld forecasting industry revenue will fall 4.3%.
Worth $456.4 million in 2002, Australia's cut flower growing industry is expected to earn just $297.2 million in 2012 – almost half its value 10 years 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.
Pulp, paper and paperboard manufacturing
Australian pulp, paper and paperboard manufacturers will struggle to remain relevant as more Australians trade-in printed books and other documents for iPads and eReaders, affecting demand for industry products. IBISWorld forecasts industry revenue will fall 3.7% over the coming year.
Australian paper producers have been battling for some time now against foreign producers that have significant cost advantages. The price of woodchips is expected to continue to remain high in 2012 – resulting in continuing high prices for printed materials. This will be an additional reason for consumers to go electronic.
Delays in the development of a number of key production sites such as the Gunns mill in Bell Bay, Tasmania and the Protavia mill in Penola, South Australia have also dented industry productivity.
