Outlook for belt & chain drives

Rapidly expanding markets of Eastern Europe and Asia Pacific offer tremendous growth potential for manufacturers of belt and chain drives in North America. The challenge before manufacturers is to ensure a timely footprint in the emerging markets without losing focus on the established ones. Toward this end, proportionate allocation of resources in line with balanced growth strategy becomes imperative.

A new report from Frost & Sullivan, North American Belt and Chain Drives Market, reveals that revenue in this market totalled $2.09 billion in 2004 and is projected to reach $2.79 billion in 2011. (All figures in U.S. dollars.)

Another crucial issue is the rapid commoditization of belt and chain drive products, which leads to adverse price pressures and compels manufacturers to lower product prices.

“Differentiation of the offerings in terms of better after-sales service and technological advancements can help mitigate the effects of price pressures,” says Frost & Sullivan power transmissions team leader Bhavdeep Virdee. “Participants stand to gain the competitive advantage if they build customer loyalty by providing efficient customer service.”

The study covers only the revenues in the market and not the units shipped. The revenues refer to the sales from manufacturer to the first level of distribution. Prices are weighted averages, accounting for the variety of models sold within the market. The base year for this report is 2004, with forecasts covering the time period of 2005 to 2011. In addition, historical data covering the years 2001 through 2003 also have been included.

The belt and chain drives market has been segmented into the following categories: industrial belts, industrial pulleys, industrial chains, and industrial sprockets.

Introduction

The transmission of power from one shaft to the other can be done in an efficient way through belt and chain drives. Belts and chains also perform speed ratio variation, clutching, torque limiting, shaft synchronization, and power transmission in more than one plane.

A belt drive is simply defined as a belt and the required pulleys for operation. A basic belt drive system includes a belt and two or more sheaves or pulleys. Power is transmitted from the pulley to the belt by the friction that develops between the belt and the pulley groove. Some systems require the use of tensioners in order to maintain belt efficiency and increase belt life cycles.

A chain drive is simply defined as a length of chain and the required sprockets for operation. A basic chain drive system includes a chain and two or more sprockets. The teeth of the sprockets fit into the links of the chain, thus transferring power from one sprocket to another.

Competitive analysis

The market leaders in the North American belt and chain drives market are Gates Corporation, Goodyear Tire and Rubber Company, Carlisle Power Transmission, US Tsubaki, Martin Sprocket & Gear and Emerson Power Transmission.

These companies have achieved their position in the market through their good product quality, excellent marketing and sales functioning, and by having well-defined future growth strategies.

The top competitors in the industry have broad product lines. This has been accomplished by a strong commitment to customer service and satisfaction and also through an aggressive approach in seeking new business.

Opportunities and forecasts

Market revenues in 2004 were estimated as $2,097.7 million and are expected to reach $2,796.6 million in 2011. These revenues are based upon a calculated compound annual growth rate (CAGR) of 4.0% for the period 2004 to 2011.

Applications for belt and chain drives cover a multitude of industries. The main industries where they are used are the process industry, which includes the food and beverages sector, oil and natural gas drilling operations, the chemical industry, and the paper and pulp industry; the material handling industry, which includes conveyors, hoists and other transfer mechanisms; the construction industry, which includes cranes, excavators, levellers and dumpers; and the automation industry, which includes the tools manufacturing industry, the robotics industry and the metalworking industry.

Apart from these sectors, there is usage of belt and chain drives in the textile, timber, mining, printing, packaging and marine engineering industries.

Synchronous and v-belt drives have seen growth in the belts market, while roller chain drives and engineering-class chain drives are growing at a steady pace in the chain drives market. Apart from these sectors, none of the other sectors in the belt or chain drives markets has seen good growth. The growth of the pulleys market and the sprockets market is directly proportional to the growth of the sectors discussed.

The price of chains has seen a steady increase since the last quarter of 2003 because of an increase in steel prices and it was expected to go higher until the third quarter of 2005. Chain manufacturing companies are witnessing a steady increase in their revenues but profits still remain low because of high manufacturing costs.

The following drivers and restraints represent the major factors influencing growth in the market.

Market drivers: Strong automotive build rates, revival of the U.S. economy, technological innovations, lack of new applications of chains and synchronous belts eating the share of the transmission drives market (this acts as a driver for the belt drives market but acts as a restraint for the chain drives market), rise in raw material prices boosting revenues, revival of the coal mining industry, and steady growth in the food and beverages sector.

Market restraints: Slump in the agriculture industry, transition to a service-based economy, users’ perception of appropriate products changing, entry of low-quality and lower-priced goods from Asian countries, and global terrorism — which has had a deep impact on the industry.

Market segment analysis

Industrial belt drives market: The total revenues in 2004 were valued at $926.3 million. The revenues are expected to reach $1,244.0 million by 2011, with an estimated CAGR of 4.3%.

The belts market is mature and there has been a gradual phasing out of a single technology and other technologies have taken over. Flat belts have very limited usage and are seen only in the aftermarket, while the flat belts market has shrunk. The major share of the belts market is held by synchronous/timing belt and the v-belt markets, with around 92.3% of the total belts market.

Industrial pulley market: The total revenues in 2004 were valued at $312.9 million. The revenues are expected to reach $404.7 million by 2011, with an estimated CAGR of 3.7%.

The market is mature and major demand increases are not seen in future. However, with the manufacturing industry getting increasingly inclined towards synchronous belts, this market is likely to see a good growth, with the major sector being synchronous/timing belt pulleys and v-belt pulleys.

Industrial chain drives market: The total revenues in 2004 were valued at $561.2 million. The revenues are expected to reach $681.0 million by 2011, with an estimated CAGR of 2.6%.

The major share of the chain drives market is held by the roller chain market and the engineering-class chain market, which together made up about 85.2% of the market in 2004.

These markets find applications in nearly every sector of the manufacturing industry. Silent chain and pintle chain technology is not very efficient and has very few buyers, except the after-sales market and the agricultural sector. The roller chain and engineering-class chain markets had a steady growth in 2004 and are expected to have a good growth rate through to 2008 after a dull phase from 2000 to 2003.

Industrial sprockets market
: The total revenues in 2004 were valued at $297.3 million. The revenues are expected to reach $345.3 million by 2011, with an estimated CAGR of 2.2%.

The growth of industrial sprockets, like the pulleys market, is dependent on its core market, that is, the chain drive market. The sprockets market has seen a steady growth in the price of the products from the last quarter of 2003, and this was largely controlled by the increase in price of the steel. The sprockets market has also seen the introduction of special alloys that have increased the efficiency and the life of sprockets and will help boost the revenues in this market.

End user market analysis

The belt and chain drives end user market saw steady growth in 2004; the growth in the U.S. economy and increases in raw material prices helped in this growth. This growth rate is expected to continue until 2008, when economic growth is expected to reach its peak. After this, the market is expected to be steady and have a slow growth until the end of the forecast period of 2011.

The key end users here are the process, material handling, construction, automation, textile, timber, mining, printing, packaging and marine engineering industries.

For more information, or to learn how to obtain the full report, visit research firm Frost & Sullivan at www.powertransmissions.frost.com.