MRO Magazine

Customer shift to low-cost countries slows domestic demand for Variable Speed Drives (VSDs)

New York, NY -- The lure of improved productivity, lower production costs, and greater global market penetration ha...


Industry

April 7, 2004
By MRO Magazine
MRO Magazine

New York, NY — The lure of improved productivity, lower production costs, and greater global market penetration has caused many original equipment manufacturers (OEMs) to shift business to newly industrialized countries. This move has created a much-depleted residual core customer base for the North American variable speed drives (VSD) market, according to a new report from Frost & Sullivan’s research service.

OEMs with foreign factories and subsidiaries seek component sources closer to their factory sites, slackening the domestic demand for these drives. Several North American drives plants have either been shut down or restructured to lower output due to this transfer of activities. To retain business, manufacturers have to develop strategies to fulfill overall customer requirements, both locally and internationally.

The Frost & Sullivan report examines the North American variable speed drives markets and discusses the various market trends and opportunities for sophisticated technologies across a range of applications.

The research covers the main product areas of AC and DC, hydrostatic, and mechanical variable speed drives technologies. It offers revenue forecasts and market structure as well as key drivers and restraints affecting growth.

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Demand for simpler solutions energizes market

Customer demand for simpler and faster solutions has accelerated demand for variable speed drives. The simplicity of the solution reduces potential additional costs by minimizing the requirement for extra features, while the uncomplicated design makes it very cost-efficient for customers wishing to maintain mechanical operations.

“The preference for simple, standard designs is expected to drive growth in the variable speed drives field as users focus on employing electronic solutions for a wide range of power ratings across numerous applications,” notes the study’s analyst. Mining, agriculture, lawn, and garden equipment do not need system synchronization or precise motion control. Users of these devices are quite satisfied with the performance, services, and availability of mechanical drives.

Competitive pricing promotes unit shipment growth

Price has become a decisive purchase factor since features and capabilities provide little advantage as differentiating tools in the variable speed drives market. Intense competition between manufacturers is creating downward pressure on prices, making them more affordable and encouraging greater uptake of the devices. These price wars are expected to escalate as more participants enter the market and vie to provide the best products at the most attractive prices.

“More specialized designs are also becoming increasingly popular, with interest in greater efficiency, smaller size, and higher torque technology promoted to a degree by their competitive cost,” observes the analyst. This is expected to have a ripple effect on higher power rating levels, bringing prices down in this sector.

The consistently declining costs are also helping companies to switch to variable speed drives for new installations and upgrades, stepping up unit sales.

For details on the Frost & Sullivan research service and the cost of this report, call 877-463-7876 or visit www.frost.com.
Customer shift to low-cost countries slows domestic demand for Variable Speed Drives (VSDs)
New York, NY — The lure of improved productivity, lower production costs, and greater global market penetration has caused many original equipment manufacturers (OEMs) to shift business to newly industrialized countries. This move has created a much-depleted residual core customer base for the North American variable speed drives (VSD) market, according to a new report from Frost & Sullivan’s research service.

OEMs with foreign factories and subsidiaries seek component sources closer to their factory sites, slackening the domestic demand for these drives. Several North American drives plants have either been shut down or restructured to lower output due to this transfer of activities. To retain business, manufacturers have to develop strategies to fulfill overall customer requirements, both locally and internationally.

The Frost & Sullivan report examines the North American variable speed drives markets and discusses the various market trends and opportunities for sophisticated technologies across a range of applications.

The research covers the main product areas of AC and DC, hydrostatic, and mechanical variable speed drives technologies. It offers revenue forecasts and market structure as well as key drivers and restraints affecting growth.

Demand for simpler solutions energizes market

Customer demand for simpler and faster solutions has accelerated demand for variable speed drives. The simplicity of the solution reduces potential additional costs by minimizing the requirement for extra features, while the uncomplicated design makes it very cost-efficient for customers wishing to maintain mechanical operations.

“The preference for simple, standard designs is expected to drive growth in the variable speed drives field as users focus on employing electronic solutions for a wide range of power ratings across numerous applications,” notes the study’s analyst. Mining, agriculture, lawn, and garden equipment do not need system synchronization or precise motion control. Users of these devices are quite satisfied with the performance, services, and availability of mechanical drives.

Competitive pricing promotes unit shipment growth

Price has become a decisive purchase factor since features and capabilities provide little advantage as differentiating tools in the variable speed drives market. Intense competition between manufacturers is creating downward pressure on prices, making them more affordable and encouraging greater uptake of the devices. These price wars are expected to escalate as more participants enter the market and vie to provide the best products at the most attractive prices.

“More specialized designs are also becoming increasingly popular, with interest in greater efficiency, smaller size, and higher torque technology promoted to a degree by their competitive cost,” observes the analyst. This is expected to have a ripple effect on higher power rating levels, bringing prices down in this sector.

The consistently declining costs are also helping companies to switch to variable speed drives for new installations and upgrades, stepping up unit sales.

For details on the Frost & Sullivan research service and the cost of this report, call 877-463-7876 or visit www.frost.com.