United States / Analyst Insights
Top 5 Highly Concentrated Manufacturing Industries

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by Marisa Lifschutz, Senior Analyst - Team Lead
May 02 2019

Industry concentration measures the extent to which major players dominate an industry. As a whole, the Manufacturing sector (IBISWorld report 31-33) is highly fragmented due to its sheer size, exhibiting a low level of market share concentration. However, when examining individual industries within the Manufacturing sector, market share concentration tells a different story.

Within a given industry, manufacturers may capture a larger market share through more efficient production of a particular item, which may be achieved through a variety of methods. Some manufacturers are able to increase market share by leveraging economies of scale or securing a reliable source of price-competitive input materials; others may increase market dominance inorganically via merger and acquisition activity.

Here’s a breakdown of five US manufacturing industries defined by a market share concentration greater than 80.0%, classifying them as ultra-highly concentrated industries.


1. Cigarette and Tobacco Manufacturing

Market share concentration for the Cigarette and Tobacco Manufacturing industry (31222) is dominated by the top four operators, which are expected to generate 93.4% of total industry revenue in 2019. Producers like Altria Group Inc. and Reynolds American Inc. have held a dominant industry position for decades, further enhancing their market share through acquisition activity. Additionally, rising barriers to entry and an increasingly stringent regulatory framework have discouraged smaller companies from entering the industry or gaining a meaningful share of the market.


2. Semiconductor and Circuit Manufacturing

The four largest players in the Semiconductor and Circuit Manufacturing industry (33441a) are expected to account for 93.1% of industry revenue this year, reflecting high market share concentration. While most industry players are small, specializing in certain product lines to serve niche markets, these smaller operators are dwarfed in scale by the vast distribution and manufacturing capacity of the industry's major players. Market share concentration for the industry has increased overall in recent years as a result of heightened merger and acquisition activity by dominant players including Intel Corporation and Texas Instruments Inc.


3. Oxygen and Hydrogen Gas Manufacturing

The highly concentrated Oxygen and Hydrogen Gas Manufacturing industry’s (32512) top four players are expected to generate 85.7% of industry revenue in 2019. Industry players have used acquisitions to gain competitive advantages over smaller operators; for example, the recent merger of Praxair Inc. and The Linde Group resulted in the combined company controlling more than 45.0% of industry revenue. Consequently, industry concentration has grown as operators acquired competing companies and production facilities to improve efficiencies and grow market share.


4. Truck and Bus Manufacturing

The Truck and Bus Manufacturing industry (33612) is highly globalized and concentrated, with the top four manufacturers accounting for an estimated 81.8% of revenue in 2019. The industry is characterized by high barriers to entry, with substantial upfront capital costs required to develop high-volume production facilities and, costly research and development investments that need to comply with stringent environmental regulations. Both factors pose a deterrent to potential entrants. The industry’s top players, including Navistar International Corporation and PACCAR Inc., leverage their favorable economies of scale to maintain a dominant market position. Additionally, some major players have enhanced concentration through acquisition activity or joint ventures.


5. Cereal Production

The domestic Cereal Production industry (31123) is extremely competitive and dominated by major players that fiercely compete for market share.  In 2019, the top four companies are expected to generate 81.2% of annual industry revenue. Cereal production is highly capital intensive, with operators requiring significant machinery and equipment inputs to complete the production process. These high capital costs tend to deter potential entrants, who are often unable to afford the capital investments necessary to participate in the industry.  Furthermore, major players such as Kellogg Company and Post Holdings Inc. maintain a competitive advantage as a result of strong brand loyalty and aggressive marketing.




Edit and Infographic Design by Emily Lidstone, Associate Editor

Chart Design by Robert Miles, Senior Strategic Market Research Analyst