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New opportunities in French electric drives market

Edited by the Engineeringtalk editorial team Jan 16, 2006

Valued at $305.0 million in 2004, the French electric drives market is likely to reach $347.4 million by 2011 at a compound annual growth rate of 1.8%.

Valued at $305.0 million in 2004, the French electric drives market is likely to reach $347.4 million by 2011 at a compound annual growth rate (CAGR) of 1.8%.

In this highly competitive market, growth is likely to be increasingly dependent on manufacturers' ability to identify specific sectors in which they can compete as well as develop and target suitable products.

"Electric drives manufacturers need to closely screen all their potential markets in order to rule out sectors that are less profitable", says Frost and Sullivan Programme Manager Mylan Nguyen.

"This will enable them to focus on areas that offer them the opportunity to establish strong, defendable and long-term positions".

Despite the relative maturity of this market in France, competition is increasing from many quarters, especially from countries such as China and South Korea.

Manufacturers in these countries have a distinct advantage in their ability to offer economical but high-quality products and are entering the French market in a bid to establish their positions.

The low-cost options offered by these new entrants pose a strong threat to existing market participants.

Western manufacturers have tended to dismiss developing economies as being incapable of making products that can match their own in terms of quality.

However, many Chinese companies are disproving this notion and are adhering to extremely high standards when building their plants and developing their processes and products.

Moreover, low production and labour costs allow these competitors to offer their products at far more attractive prices than those of their European competitors.

In such a situation, Western manufacturers will find competing on cost extremely difficult.

"Market niching could offer an effective solution to manufacturers and provide a solid defence against increasing competition, particularly from new entrants, as well as rising globalisation", notes Nguyen.

"By developing application-specific technologies or focusing on particular end-user sectors, manufacturers could adapt their offerings to selected markets".

End-user interviews conducted by Frost and Sullivan revealed that companies' reputations tend to be sector-specific and that end users in different sectors view these companies differently.

This suggests that entering a new and hitherto unexplored sector or trying to establish cross-industry positions might prove to be an expensive and less effective exercise.

Therefore, manufacturers would do well to focus their efforts on specific end-user sectors.

These interviews further revealed that end users increasingly perceive electric drives as "commoditised" and are unclear about the technical differentiation between individual products.

Changing these perceptions and communicating product differentiation is bound to be a considerable challenge for market participants.

Across all sectors, quality and reliability, price, delivery time and ease-of-use of electric drives emerged as the most important purchasing criteria.

Most end users usually kept some stock of certain electric drives as a back-up in order to replace them immediately and ensure the continuity of the production process.

"Every end-user sector expected quality electric drives to work without any failure for a long time", observes Nguyen.

"Manufacturers should focus on offering drives with the required quality and power rating for specific sectors and applications as well as on shortening delivery times as it is critical to receive new drives immediately in the case of continuous processes".

New opportunities in the maturing French electric drives market are likely to spring from ongoing innovations and product development, which are already having a positive impact on the market.

These technological innovations are the result of increasingly complex manufacturing systems that require a new generation of electric drives enabling easy programming, remote operation and some amount of drive independence.

In response to these needs, manufacturers have started offering more precise, small-sized and complex solutions, particularly in the servo drives market.

The trend towards more "intelligent" and customised electric drives is likely to support future market growth.