Challenging times for European motors market

The European integral horsepower motors market continues to be impacted by a mixture of trends including the weakening of the global economy.

The European integral horsepower motors market continues to be impacted by a mixture of trends including the weakening of the global economy, falling prices and contracting demand for DC motors, which has created an arduous business environment for electric motor manufacturers.

Producers are seeking to identify new avenues for growth by penetrating particular geographic regions, applications or product sectors more deeply.

A new study by Frost and Sullivan, the international market consultancy, values the European market for integral horsepower motors, comprising all industrial AC and DC motors with a power rating in excess of 1hp or 0.75kW, at $2.14 billion in 2002.

The overall market has been negatively affected by declining demand in the DC sector and compounded by flat demand in the dominant AC motors market.

The decline of industrial activity in the large German market, as well as weakening confidence across many of the key user sectors, has also had a significant impact on current market trends.

However, these negative trends are expected to gradually dissipate with the eventual strengthening of the global economy, which should stimulate industrial investment, and hence demand for electric motors.

Benefiting from the projected global economic upswing, European sales of integrated horsepower motors are expected to make a gradual recovery, with shipments expected to reach 8.0 million units in 2009, equating to revenues worth $2.34 billion in the same year.

Mik Sabiers, Research Manager at Frost and Sullivan, believes there is little sign of easing competitive pressures.

Market trends are being influenced by the poor growth recorded in the market as well as a desire to gain orders from key clients that invest in significant totals of motors on an annual basis.

He cites quality, competitive prices, lead times as well as overall reliability as the most crucial guarantor of customer satisfaction.

Boosting flagging revenue growth is the large base of customers continuing to invest in the technology and needing to replace and upgrade this installed base.

Sabiers notes that gaining share from other competitors rather than through organic expansion underpins market participants' success in the integral horsepower motors industry.

"The European electric drives market is continuing to advance.

Currently, the potential total of customers using the advantages of drive technology is continuing to expand.

Motor manufacturers should benefit from demand for more advanced motors matching the requirements for operating at variable speed.

This should be a contributory growth factor in future years", remarks Sabiers.

In tough market conditions, the most resilient performer in terms of product segments is the AC (75-750kW) motors market.

This sector is expected to gain from a good advance in overall demand, interest from users that had used DC technology and improved pricing factors, as pressures at these power rating levels become less marked.

The top performers in Frost and Sullivan's review of national markets include Eastern Europe, Iberia and Scandinavia.

Eastern Europe should benefit from rising investment over the next few years, stimulated by accession to the EU.

Iberia continues to thrive on upgrades and production plant investment, while Scandinavia has been supported by demands for more advanced and specialised solutions from various sectors of industry.

The largest single sector demanding motors was the pumps, valves and compressors market, representing 25.7% of total market revenues in 2002.

Developments in this market are expected to be just below the market average as trends are shaped by a mixture of pricing pressures combined with growing gains in demand for more efficient and higher performance motor technology.

The strongest growing individual sector is expected to be the heating, ventilation and air conditioning (HVAC) sector, forecast to climb to $315.3 million in 2009.

This sector should gain from greater demand across many regional markets, a focus on upgrades as well as further technological inroads into the related HVAC drives market.

The study observes a limited number of leading competitors that have managed to build a strong position at the total European level.

Siemens Automation and Drives of Germany and ABB Motors of Sweden have fortified their presence in the European integral horsepower motors market and occupy the leadership position.

Other key manufacturers include Leroy-Somer, the leading manufacturer in France, and Brook Crompton, which continues to dominate the UK market.

Only these four companies have established a share of more than 5% at a total European level.

Other market participants that hold a significant standing in certain regions or application sectors include VEM motors of Germany; Alstom and Ansaldo/HVE, which both focus more strongly on high-voltage motors; Thrige, Sicme and Sauer-Danfoss in the DC field; as well as ATB, Cantonimotor, Lafert, FKI Marelli, Electro Adda, WEG Electric, Loher, Teco and Baldor.

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