We believe that the cost advantage of steel structure manufacturers stems more from economies of scale, and the cost reduction caused by procurement and process savings.

The industrial chain of steel structure generally includes steel manufacturers, steel structure manufacturers, steel structure construction contractors and builders.

The business model is to focus on steel structure construction and expand to the general contracting of construction, and is committed to the operation of the whole industrial chain of steel structure.

The steel manufacturers are in the upstream and are mainly responsible for the supply of raw materials, and the steel structure manufacturers are in the midstream, The difference of manufacturing capacity leads to differentiation among enterprises, while the steel structure construction contractor is located in the downstream, which usually needs to coordinate the relationship between the owner, the general contractor and the design institute.

At the same time, with the supply side reform of the industry, backward production capacity was gradually eliminated.

As an important part of construction engineering, the business model of steel structure industry is highly related to the contracting mode of steel structure engineering construction units.

The enterprise profits mainly come from product manufacturing, or some from installation profits.

The contractor extends upward along the industrial chain, represented by Seiko steel structure and Southeast grid.

Source: there are two business models: assembly engineering network 1, manufacturing and general contracting.

The core competitiveness of the steel structure contractor lies in the management ability of the whole project investment.

Lifting Anchor

The business profit margin of pure steel structure manufacturing is thin.

From 2013 to 2017, steel prices fluctuated sharply, and small and medium-sized steel structure enterprises with weak bargaining power and risk resistance to products were forced to be eliminated.

Small steel structure processing enterprises are subject to steel price fluctuations, replacing business tax with value-added tax and environmental protection factors, and the clearing of production capacity is more obvious, The current industry competition pattern is more favorable for manufacturing leaders with investment and production cost advantages; For the steel structure contracting business, the strength of qualification, capital, technology and marketing requires higher requirements for steel structure enterprises.

For steel structure manufacturers, cost control is mainly reflected in two aspects: first, the advantages of procurement and capacity smoothing brought by scale effect.

Because most of the manufactured products are similar and the production difficulty is not high, the manufacturers with lower pricing are easier to obtain orders.

In the traditional construction mode, the separation and disconnection of construction subjects is easy to cause waste of investment, and the economy of the project is not high.

The core profit point and competitiveness are different.

Generally, the pricing method of manufacturing orders is selling price = (steel price + processing fee) * quantity.

Under the condition of low profitability, large steel structure installation enterprises do not have production expansion plans, but prefer outsourcing processing.

At the same time, it is worth noting that among the 2500 steel structure enterprises, there are 510 units with the qualification of steel structure manufacturing enterprises, of which the number of enterprises with an annual output of more than 50000 tons, 100000 tons and 300000 tons are 58, 41 and 12 respectively, and only 12 enterprises with an annual output value of more than 5 billion yuan.

The improvement of the industry competition pattern is mainly reflected in the reform of the industry supply side, the continuous clearing of backward production capacity and the improvement of the leading concentration rate.

The main steel structure listed companies can be roughly divided into two categories: steel structure contractors and steel structure manufacturers.

Focusing on how to deal with the relationship with the general contractor, steel structure enterprises make a breakthrough in the business model under the existing competitive pattern.

From the perspective of business model and profit source, the steel structure contractor is mainly responsible for the project management, undertakes the project by bidding, and then designs, produces and completes the task of installing steel structure products according to the actual needs of the project, or entrusts the design link to relevant design institutes and hands over the task of producing steel structure products to professional manufacturers, The profits of steel structure contractors mainly come from engineering contracting business; Steel structure manufacturers are mainly responsible for the production of steel structure products, that is, they can manufacture different types of steel structure products according to the personalized needs of customers, and can provide supporting installation services.

According to the data in the survey report on the production and operation of Chinese steel structure manufacturing enterprises in 2013, there were about 3000 steel structure enterprises in 2013 under incomplete statistics.

General contracting (EPC) is the development trend of modern construction industry.

Due to the integration of design and construction, the general contracting mode improves the economy of the project, saves investment costs and thickens profits.

In the bidding process, qualification and brand usually constitute an invisible threshold, and the strength of small and medium-sized enterprises is weaker than that of leaders..

2、 The competition pattern is improved, the backward production capacity is eliminated, and the leading concentration is expected to improve.

The manufacturer extends downward along the industrial chain, takes Honglu steel structure as the representative, adheres to steel structure manufacturing and makes fine and fine processing links.

After the scale advantage is formed through capacity expansion, the procurement cost can be reduced.

At the same time, large capacity and full orders can reduce the labor cost and fixed cost amortization per ton; The second is to improve the capacity utilization rate and reduce the scrap rate of steel structure through fine management and order splitting and production scheduling.

The current industry competition pattern is more favorable for leading enterprises.

At present, the market share of leading steel structure enterprises is still low, but it has shown an upward trend since 2016.

Due to the large volume of steel structure contracting business, the core competitiveness of steel structure contractors lies in the management ability of the whole project investment in the process of “design manufacturing installation”.

Steel structure manufacturing business is labor-intensive, and it is difficult for the industry to achieve large-scale production capacity in the short term.

According to the statistics of China Steel Structure Association, there were about 2500 domestic steel structure enterprises by the end of 2018, and the supply side reform of the industry continued.

Generally, there are two contracting modes for the owner (construction unit): (1) the owner contracts the construction project to the general contractor or steel structure contractor; (2) The owner purchases steel structure products directly or designated from the steel structure manufacturer.

The core competitiveness of steel structure manufacturers lies in the cost advantage of steel structure products.