Product category:
Engineering Industry Reports and Surveys
News Release from: Frost and Sullivan
Edited by the Engineeringtalk Editorial
Team on 16 July 2002
Handling sector offers high growth for
drives
Manufacturers active in the electric drives market - one of the fastest growing sectors of the overall motor and drives industry - are in ebullient mood, according to a new survey.
Manufacturers active in the electric drives market - one of the fastest growing sectors of the overall motor and drives industry - are in ebullient mood Deepening penetration of the technology into a wider range of applications will continue to push momentum behind sales
This article was originally published on Engineeringtalk on 9 Aug 2000 at 8.00am (UK)
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Commanding just over a third of all European sales collectively, the mechanical handling sector, along with the food and beverage and the HVAC market, rank amongst the most vital industrial customers and key revenue generators of the electric drives industry.
An increasingly discerning customer base, coupled with the broadening scope of application areas for drives in the handling sector, have supported new and replacement orders.
Latest findings revealed in a recent end-user survey by Frost and Sullivan, the international marketing consulting company, put electric drives market contenders in pole position to cash in on the surge of activities displayed by the European handling sector.
Sales of electric drives to the mechanical handling sector are expected to grow from $169.3 million in 2001 to $214.5 million in 2008.
Intensifying levels of automation and design developments prompted accelerated growth in the materials handling sector of the European electric drives market before the market started to struggle in the face of the global economic slowdown in the latter half of 2001.
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Despite its advancing maturity, the handling sector still exhibits a high degree of buoyancy and scope for a further advance in revenues, with annual market growth recorded at 3.9% in 2001.
Low purchase volumes (just 2.8% of customers purchased more than 100 drives during their last transaction despite requirements for larger numbers of drives), however, continue to depress sales.
The overall result is that logistics are a more important factor and manufacturers need to be able to deal with supporting the customer base on a regular basis to ensure that they continue to specify and invest in a greater total of drive technology.
On a more optimistic note, 43.2% of respondents expect to increase spending in the coming year, and of those, a quarter project their purchases to rise by more than 10%.
The user base surveyed ranged from purchasing and plant managers through to application engineers as well as senior management within companies in the handling sector.
The largest percentage of parties surveyed were engineers involved in not only specifying the drive, but also in operating the technology.
Frost and Sullivan cites the frequency of purchase (51.8% of respondents claimed to buy a drive at least once a month) and robust levels of end-user satisfaction as the key elements driving the engine of the handling sector's growing importance in the electric drives market.
Frost and Sullivan's findings crystallise a notably high level of new sales, providing further impetus for growth in the handling arena.
Over 60% of sales to this sector are for new installations, highlighting the significance of expanding application penetration and user confidence in the technology.
Scrutinising sales, the survey states that more than half of all purchases pertain to single drives, with more than half of all transactions carried out on a monthly basis.
In order to benefit from the high level of regular orders on an annual basis, manufacturers are urged to place more emphasis on strong relationships with clients.
In terms of power ratings, more than a fifth of sales occur in the drives with power ratings under 2.2 kW category, however, the average spend by customers was valued at between $5,000 and $50,000, demonstrating a substantial value of individual orders.
Manufacturers are recommended to enhance sales by focusing on simple technology as well as improved volumes.
The customer base in the drives market remains highly cost conscious.
With a strong degree of price sensitivity, manufacturers need to adopt flexible pricing strategies to guarantee that they can continue to grow their business and penetration of drive technology as a whole.
A fifth of respondents stress competitive pricing and product reliability as key determinants behind their purchasing decision.
Frost and Sullivan's review of user demands in terms of unprompted responses, shows that pricing - clearly the Achilles heel of many suppliers - is of paramount importance.
To improve their competitive edge, manufacturers must differentiate their product line in terms of price by focusing on cost-effective advanced solutions.
In addition, 94% of respondents rate product reliability as a crucial criterion in the sales process.
While the majority of parties questioned during Frost and Sullivan's survey agree that ABB has secured a dominant foothold in the overall market, Siemens achieves the highest level of brand recognition and is particularly praised for capturing mind share.
Finally, major rankings in terms of satisfaction and loyalty presented mixed results.
While customer satisfaction scored highly, pegged at 82.6% overall, the study exposes a conspicuously low level of loyalty, limited to only 27.5% of customers, who stated that they would not consider another manufacturer for purchasing.
This analysis covers a comprehensive presentation of user demands and interests in the handling sector of the European electric drives market.
Information derived from a detailed user survey identified the main purchasing criteria, with further coverage looking at spending levels, the main customer requirements as well as a detailed review of competitors serving this sector and their own customer base.
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