I regularly get this topic tossed at me in meetings … namely “what sectors are the sectors to look at investing in to get the best growth prospects in CY 2010”.
Since I get asked it often enough I’ve created this entry and I can point people to it in future rather than “playing the broken record” again.
Feel free to pick and choose from this list in terms of those sectors you prefer, or are well-versed in.
RECRUITMENT: Having been massacred in 2008 and the H1 of 2009, recruiters started making positive inroads during Q4 of 2009 and now into Q1 of 2010.
The smart recruiters got into Outplacement to stop the revenue bleeding in 2008/09 (and service what their clients wanted most often). Outplacement is still relevant in 2010, but now it is not about shedding staff “that we can’t afford” rather it is about M&A activity and typically 2 people (one from each company) in 1 position (in the merged business) doesn’t go.
The demand for Senior Executives, ICT Specialists and Financial Services specialists is seen as being a strong driver for recruitment growth in 2010. The growth is being driven by both Contract and Permanent staffing requirements in 2010, whereas it was predominantly from Contract staffing requirements in 2009.
NETBOOKs: Primarily used for web-browsing and email, Netbooks will see continued strong growth in 2010 and beyond. The introduction of Intel Atom processor in 2008 spurred the growth of netbooks. This category is still in a formative stage with size, features and relative performance levels in a state of flux.
However, with the anticipated introduction of the Chrome operating system by Google this category will experience strong demand on the back of Google’s marketing campaign. For those not familiar … the Chrome o/s promises Netbook users will have an instant TV-like experience for bootup and make web-browsing and emailing far simpler than current PC’s and Mac’s.
SMART PHONEs: Smart phones grew in 2009 and are expected to grow even further in 2010 as manufacturers and operators seek to drive open platforms into mass market. The strongest demand is expected to be iPhone, Blackberry and the Android based phones such as one from Motorola. The smart phone market has entered a period that presents enormous growth opportunities for many key players including semiconductor vendors, platform providers, Telco’s, device manufacturers and software developers.
You just need to observe the growth in iPhone apps – currently over 195,000 applications and it has grown by 20,000 in just the Feb/Mar months of 2010.
CLEANTECH: As the global economy pulls out of a deep recession, the job market is changing with information technology and clean technology gaining speed.
I’ve already covered some IT areas above, so now touching in CleanTech there are a couple of really solid growth areas:
- Renewable Energy; and
- Waste Processing.
An interesting development at the bigger corporate end of town is the emergence of the “Chief Sustainability Officer” – in effect the new Environmental Chief at big firms.
In Australia the major push for corporations to become more green has been in place since around 2005, with most of the large corporates provide a separate Environment Impact Statement along with their Annual Report.
In the next 5 years the demand for a CSO will dramatically accelerate as companies will need a CSO who is accountable to both the owner and share holders.
SUGAR: While the past 5 years have seen the sugar manufacturing industry buffeted by the highs and lows of global demand, supply trends and world prices, 2010 is shaping up as seeing Australia’s sugar manufacturing industry positioned as the biggest grower for the 2010 calendar year increasing by between 15% to 20% a massive increase.
ORGANIC FARMING: Demand for organic products in Australia and around the world has risen in recent years as consumers increasingly consider the health benefits and environmental impact of their food choices. The industry is projected to exceed $425 million in 2010, representing better than 10% growth from 2009, and employment is expected to grow by between 2% and 4%.
OIL & GAS PRODUCTION: Although most analysts predict oil production will decline in 2010, this will be more than offset by a rise in natural gas production, seeing the sector post close to 15% growth in 2010 (to nearly $40 billion) – and generating close to a 4% increase in employment.
INSTITUTIONAL BUILDING CONSTRUCTION: Centred on the construction of buildings where Australians learn, work, are healed, socialise, exercise, pray and seek justice, the Institutional Building Construction industry is expected to grow by 12% in 2010 to nearly $10 billion, strongly supported by increased government spending – especially on educational structures.
HEALTH INSURANCE: Despite a rise in Medicare levy surcharge thresholds, many predict 2010 will see an increasing number of Australians take out private heath cover. This, combined with a rebound in investment income for insurers, will see the industry post growth of 10% to nearly $15 billion 2010, while employment is expected to experience slight growth at 0.6%.
There are several factors leading more Australian’s to take out private health insurance, including rising incomes, tax advantages, an ageing population, plus rising waiting lists for elective surgery and essential surgery in the public health system.
ALTERNATIVE HEALTH THERAPIES: A growing acceptance of alternative therapies and more holistic approaches to health has seen alternative health therapies increase in popularity in recent years, with an estimate seeing the sector experiencing growth of 5% in 2010 to total over $3 billion. This will be matched by an increase in employment within Australia of between 4% to 5%, which is a significant employment growth for any sector in 2010.
ONLINE SHOPPING: As access to technology improves, and our overall skill in using it grows, many trend watchers are forecasting time-poor bargain hunters will continue to flock to e-tailers to meet their shopping needs. Improvements in online store usability, efficiency, reliability and security are expected to drive growth of nearly 5% in 2010 to reach $20 billion – with a resulting increase of 3% in employment.
Within Australia, online sales currently represent just 5.5% of all retail sales, well below levels in the US and UK, leaving room for significant growth over the next few years. Current lower levels are partially due to the fact that Australian retailers have been slow to offer online sales.
WEIGHT LOSS SERVICES: In one of those very funny ironies … losing weight will grow by almost 5% in 2010 to be worth more than $750 million, generating almost a 3% increase in employment. The sector is expected to continue to grow in 2011, as rising obesity rates and growing public awareness of subsequent health issues lead more Australians to invest in weight loss.
The increasing availability of weight loss drugs and supplements, as well as growing acceptance of surgery as a treatment – such as lap-bands – will see more Australians invest in weight loss treatments in the coming years.
BABY PRODUCTS: Over the last 5 years there has been strong growth in high-end baby products, as first-time parents in their late-30s and 40s buy up big for their newborns – seeing the sector forecast to grow by over 3% to more than $4 billion in 2010, generating a 3% increase in employment.
Key areas of growth include premium kids clothing, with celebrated fashion designers such as Collette Dinnigan and Fiona Scanlan launching children’s lines, as well as the continued expansion of ‘mini me’ branding and the booming “cottage industries” being supported by their own version of eBay (eg: Etsy).
“Not Growth” sectors
Since we’re on the topic – how about some of the “others” for 2010, ie: the sectors that are not going to grow, and in fact are most likely to be big losers in 2010.
IMAGE PROCESSING & PRINTING SERVICES: The digital revolution and the advent of digital cameras, home photo printing equipment, digital photo frames, and electronic storage of images has led to the image processing and printing services sector suffering significant losses, with revenue forecast to fall by another 6% in 2010 to under $550 million. Corresponding to the fall in revenue, the number of jobs is expected to fall by nearly 4%.
MULTI-UNIT APARTMENT & TOWNHOUSE CONSTRUCTION: Whilst this seems a bit counter-intuitive, and despite a shift in lifestyle and residential preferences toward higher density housing, it is expected that multi-unit apartment and townhouse construction will contract sharply in the coming year, falling by over 5% in 2010 to $6.6 billion – with employment dropping by nearly 4%.
Reduced access to credit for developers, rising interest rates and a reduction in the first home buyers grant will be the main contributors to the downturn.
WIRED TELECOMMUNICATIONS CARRIERS: In 2010 the number of consumers switching from wired to unwired services is expected to increase and accelerate, resulting in a fall of nearly 5% in 2010 to $12 billion for wired telecommunications carriers.
Consumers are increasingly opting for un-wired options as they allow cost saving benefits such as removing line rental expenses, resulting in a decrease in revenue and drop of over 3% in employment.
VIDEO HIRE OUTLETS: Increasing electronic distribution of video content and a greater volume of both pay and free-to-air television programming has resulted in a long-term downward trend for video hire outlets. In 2010, the industry’s revenue is expected to decrease by nearly 4% down to around $520 million, and the number of jobs in the sector is expected to fall by between 1% and 2%.
TRAVEL AGENCY SERVICES: Most analysts predict another poor year for travel agents following a further decline in international tourism and the rapid growth in online booking sites. Revenue is tipped to contract by about 2% in 2010 to $2.7 billion, while employment will fall between 1% and 2%.