The Top 5 Booming Industries of 2013

[Written by: Jeffery Kadlic]

Each year brings with it bold predictions on what the future holds, where the opportunities lie, and where the capital for small businesses is flowing—and this year is no different. Below is a collection of the top five industries expected to boom in 2013.

Automotive (Service)

While feature-filled 2013 models have already proven to be popular with consumers, the real opportunity in the automotive industry will be on the service side this year. According to research firm R.L. Polk, the average vehicle on the road today is a record 10.8 years old, meaning that Americans are keeping their vehicles longer than ever, and companies that provide support and service to maintain them will continue to see their revenue and profits increase.

For the over 23 million Americans who remain unemployed or underemployed, the decision of whether to repair or replace an existing vehicle comes down to simple math. Without the cash, credit, down payment, or monthly income to afford a new car, these consumers are forced to hang onto their aging vehicles even longer, and therefore are dependent on auto service stations to repair them so they can maintain a source of transportation.

Compounding this aging automobile phenomenon is the fact that vehicle quality across all brands has gone up considerably over the past decade, meaning that most cars now possess the reliability and durability to perform reasonably well 10, 15, even 20 years down the road. The companies that sell the parts and service to keep them running are well positioned to benefit from this trend, and poised to continue growing in 2013 and beyond.

Natural Gas (Hydraulic Fracturing)

The pace of hydraulic fracturing, or fracking, is expected to accelerate in 2013, as this method of economically forcing natural gas out of shale buried deep below the earth using highly pressurized and treated water continues to gain a foothold. According to U.S. Energy Information Administration projections, there are 827 trillion cubic feet of natural gas—or reserves—recoverable in the United States, which represents about 36 years at the nation’s current rate of consumption.

The sheer volume of America’s recently discovered reserves, combined with this efficient new method for extracting natural gas from the earth, will continue to send tremors through an economy starved for activity. The New Year will continue to see bucolic residential towns transformed into bustling 24/7 commerce centers by the discovery of natural gas reserves poised for extraction. The net effect for small business investors and owners in these towns will be greatly enhanced visibility, record numbers of customers, and all of the opportunities that come with rapid expansion. As always, there will be challenges associated with the growing pains accompanying accelerated growth as residents and newcomers attempt to reconcile their new forged identity.

Oil Production

While the ongoing natural gas boom has received much of the attention recently as the headline-grabbing, news media darling, the traditionally staid oil industry has been quietly going through an infrastructure renaissance, and building a growth story of its own. According to John Kilduff of Again Capital, the U.S. became a net exporter of refined products in 2011 for the first time since 1949. In 2013, oil production has already topped seven million barrels per day for the first time since March 1993—nearly 20% above the amount produced this time last year. Based on the use of non-conventional drilling techniques in places like North Dakota and Texas, U.S. production has increased so quickly that the U.S. is expected to surpass Saudi Arabia in crude production by 2020, according to International Energy Agency statistics.

In addition to significant capital investment in new production methods, the other key component of America’s oil industry growth is the addition of critical pipeline capacity to transport landlocked U.S. crude from storage in Cushing, Oklahoma to the Gulf Coast refining areas. Early in 2013, an additional 250,000 barrels a day of capacity will join the existing 150,000 barrels a day capacity to dramatically increase the amount of inventory transportable from the Seaway pipeline, and for the first time, finally provide relief for this distribution bottleneck. Even though U.S. oil production is already at a 15-year high, it is now expected to rise to 7.3 million barrels per day in 2013, representing 300,000 more barrels than its December forecast, and 900,000 barrels per day more than what was produced in 2012.

The opportunities and capital for small businesses available in this sector are similar to the natural gas profile, with local boom towns benefiting in a significant way to the tremendous growth in people and products, as well as an industry wide benefit to everyone participating in this far reaching ecosystem.

U.S-Based Manufacturing

Twenty years ago, a preponderance of interrelated market forces initiated the great outsourcing experiment that shipped American jobs from the Midwest to the Far East. The results have been mixed at best, and now—twenty years later—a new combination of market forces are compelling more and more firms to consider bringing manufacturing back to the U.S. According to December 2012’s The Atlantic magazine, the primary drivers of this insourcing movement are:

  • Oil prices are three times what they were in 2000, making cargo-ship fuel more expensive now than it was then.
  • The natural gas boom in the U.S. dramatically lowered the cost for running something as energy-intensive as a factory here in America.  (Natural gas now costs four times as much in Asia as it does in the U.S.)
  • In dollars, wages in China are some five times what they were in 2000 and they are expected to keep rising 18% a year.
  • American unions have become more competitive, with many changing to a two-tiered wage scale to keep costs down.
  • U.S. labor productivity has continued to increase, meaning labor costs have become a much smaller proportion of the total cost of finished goods.

The evolution of the historic outsourcing business equation as outlined above—when combined in total—represents a true game-changing dynamic as it relates to the bottom line of American manufacturing firms. Throw in the additional advantages of speed to market (versus weeks crossing the ocean on a container ship) plus a more secure environment for protecting intellectual property, and you have the ingredients for a resurgence of Made in America products (and pride) in 2013.


According to CoreLogic’s CEO Anand Nallathambi, “For the first time in almost six years, most U.S. markets experienced sustained increases in home prices in 2012.”  His sentiment is supported by the fact that for nine straight months, national home prices have been in the positive, and the gains are continuing to increase, as the latest reading for November 2012 shows a 7.4% increase from a year earlier—and that includes the sale prices of distressed properties, bank-owned homes, and short sales. This increase represents the largest year-over-year jump since the height of the housing boom in 2006.

While the competition by investors focused on distressed properties was responsible for much of the home gains in 2012, the expectation for 2013 is that the non-distressed market will continue to catch up. Excluding distressed sales, home prices still saw a healthy 6.7% annual gain in November, and CoreLogic analysts are predicting an even larger 8.4% jump in December.

The fact that home construction starts surged 12% in December (representing the strongest year-end since 2008), combined with initial unemployment claims falling to a January 2008 low, suggest that those businesses typically associated with the housing “food chain” should stand to benefit from this increase in activity and growth within this sector.

Jeffery Kadlic is a co-founder and managing partner at Evolution Capital Partners. After gaining years of experience in the banking, insurance, and private equity industry, he began Evolution in 2005 to help business owners take their business from start up to established firm.

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