German drives market attracts competition

The German electric drives market earned revenue of $778.1 million in 2004 and is estimated to reach $884.1 million in 2011.

The German electric drives market is seeing growth in a variety of new, intelligent, multifunctional products, as end users seem to be showing a preference for these units for space, cost saving and ease of installation reasons.

Technology advancements reflect trends such as decentralisation of drives, higher safety and security and integration of Ethernet in the communication process.

Frost and Sullivan finds that the German electric drives market earned revenue of $778.1 million in 2004 and estimates to reach $884.1 million in 2011.

"As parts of the market become more demanding, in terms of technological integration, the drives market must adapt its offering to fit with the increasingly complex and automated manufacturing environment", states Frost and Sullivan Programme Manager Richard Tamworth.

The growing popularity of factory automation systems, such as Scada and DCS, means that drives need to communicate as part of a wider manufacturing network.

Some drives manufacturers are already positioning themselves to take advantage of this trend, and others are being squeezed out by increasing price competition from Far Eastern manufacturers at the less-intelligent end of the market.

The German market remains a key target for new manufacturers, despite its relative maturity.

As a result, new competitors from regions, such as China and South Korea, are entering the market in order to establish positions.

Current market participants will need to be aware of the threat posed by new entrants, offering low cost options.

"Western manufacturers have traditionally felt that developing economies are not capable of producing similar quality products", notes Tamworth.

"However, many Chinese companies are building their plant, processes and products to very high standards, and this, together with their low production and labour costs, will allow them to offer products for lower prices than European competitors".

The challenge here will be to prevent these companies from gaining a foothold in the market and changing the market's existing perception.

At the same time, existing suppliers need to emphasise their traditional strengths and reputation within the market.

Where new manufacturers may offer purchase cost advantages, existing suppliers may be able to offer superior servicing and personal service.

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