As product applications place increasingly stringent demands on centrifugal pumps, end-users are looking towards incorporating more efficient technologies, says a new study by Frost and Sullivan
As product applications place increasingly stringent demands on centrifugal pumps, end-users are looking towards incorporating more efficient technologies.
A new study by Frost and Sullivan, the international marketing consulting company, shows how advanced products are alleviating price pressures whilst generating greater investment across the European region.
Frost and Sullivan forecasts revenues for the industry to rise from US$2.82 billion in 1999 to US$3.34 billion by 2006.
The compound annual growth rate for the total market will reach 2.5 per cent over the period.
Alongside numerous other industrial pump markets, the recession of the early 1990's inflicted a serious blow on demand.
The improved European economy has led to revived investment - an indication of the important relationship the industry has with the general economic climate.
Historically, price has played a key role in the purchase decision of centrifugal pumps.
However, the importance of product quality has generated greater investment within high-end market sectors.
The need for increasingly sophisticated products has led to a rise in the general quality of centrifugal pumps.
The largest product sector is the single-stage radial flow pumps market, with 33.4 per cent of total revenues.
The sealless pumps market will experience the highest levels of growth, primarily as a result of an expanding number of applications and new industry legislation. Demand for more efficient pumps has helped to drive revenues in a number of markets where demand had been somewhat static, offsetting negative price factors.
Frost and Sullivan Research Analyst Sean French comments: "Price cuts have had a major influence on the market and have inhibited revenue growth over the last few years.
Competitive pressures, which have been one of the major causes of price cuts, are, however, expected to ease towards the end of the forecast period." Over-capacity remains a problematic issue, with more companies marketing a wider range of centrifugal pumps.
As market participants bid to undercut one another in an attempt to maintain sales, intense competition is prevailing.
These issues, coupled with a general trend of rising market transparency, have enabled end-users to make greater price comparisons.
KSB was the market leader in 1999, followed by ITT and Grundfos.
These larger manufacturers are characterised by their operations across multiple product sectors and geographical regions.
Rising consolidation across the entire industry has led to weaker companies being priced out of the market.
Recent mergers and acquisitions include Flowserve's purchase of IDP and Weir's purchase of Warmen.
The German market holds the largest revenue share, with 32.9 per cent of the market in 1999.
Both Germany and second placed France are expected to see a decline in their relevant revenue share, following increasing growth rates in other regions.
Italy, Iberia and Scandinavia are expected to gain increased revenue share, as key application areas become more established.
In summary, the market will experience rising revenues over the forecast period.
Price will maintain a critical role within the industry, albeit not as significantly as in recent years.
Continued demand for high performance products will allow average prices to stabilise and effectively rise towards the latter part of the period.
Strategies for future market success point towards a concentration on the development of core business activities.
Furthermore, Sean French comments: "Customer loyalty should be a priority for these companies, they should consider if their standards, service and support are sufficient and consider further developments in these areas." Frost and Sullivan is an international marketing consulting company that monitors a comprehensive spectrum of Instrumentation, Control and Engineering markets for trends, market measurements and strategies.
This ongoing research is utilised to complement a series of research publications, including the European Vacuum Pumps Market, to support industry participants with customised consulting needs.
Free executive summaries of all Frost and Sullivan reports are available to the press.
