Sales of medium-voltage drives in the Chinese market are forecast to grow at an average of 16.6 percent per year from 2010 to 2015, according to IMS Research.

(Although the company also reports that the low voltage drives market in China is cooling off.)

Wilmer Zhou, senior analyst, comments, “The market for medium-voltage motor drives is closely related to large projects and capital investment. As the Chinese government tries to transform the economic growth model from investment to consumption, the investment in mines, oil and gas fields and infrastructure expansion will continue, as will energy-saving renovations in factories, which will help to maintain the steady growth of the market for medium-voltage motor drives.”

The Chinese market for medium-voltage motor drives continued to grow steadily in 2011, increasing 15.8 percent to nearly $700 million, because most industries continued to invest steadily in “green” products. Growth will slow slightly in 2012, as municipality spending and investments are slightly lower in 2011 and 2012.

“In China, users of medium-voltage motor drives have the backing often of being in strong, state-owned groups. These key industries are dominated by the Government, and procurement has always been heavily tinged by politics. Suppliers with good government relationships and those with the backing of state-owned groups have more opportunities in the market”, added Zhou.

Overall, the leading suppliers LD-Harvest, Siemens and Hiconics are capturing a greater share of the market share while the smaller suppliers are holding or losing market share. Siemens and LD-Harvest, the market leaders, each accounted for an estimated 15 to 17 percent of total 2011 revenues. With an aggressive market strategy, Hiconics is estimated to have increased its market share to 11.5 percent in 2011.

For small companies looking to enter the medium-voltage drive market the three largest barriers to entry are: having to bid at an unreasonably low price, extended payment terms, and no service fees. However, the higher profit margin in high-end markets (mining hoists, traction, rolling mills, and applications with high power rating) is attracting new suppliers. There are just over 30 suppliers to the market for medium-voltage motor drives in China. Supply is very concentrated, with the top three suppliers accounting for an estimated 45 percent of the total revenues in 2011, and the top 10 suppliers accounting for 77 percent.

IMS Research forecasts that growth from 2013 to 2015 will ramp up. The reasons for this are that investment into infrastructure is expected to come back after a short downturn in 2012, the number of retrofit projects for power saving will increase, and there will be increased installation of high-efficiency motors.

According to IMS Research, the Chinese market for low voltage motor drives slowed considerably in 2011 from an abnormally high 2010. Revenues from motor drives (excluding software and services) are projected to grow at a compound annual growth rate (CAGR) of 13.7 percent from 2010 to 2015.

The total Chinese market for low-voltage AC & DC motor drives (including software and services) was estimated at $2.68 billion in 2010.

“In the first half of 2011, the markets for low-voltage drives were still growing strongly. In the second half of 2011, as the Chinese Government tightened monetary policies and imposed strict lending conditions; this caused delays in numerous large projects, such as high-speed railways, city metros, highways, and factory renovation projects. These policies are also causing financial strain for both end users and machine builders”, said a company spokesperson.

"In June 2011, the market went into a precipitous decline. The bad news first came from local small and medium machine builders in South and East China; many reported no new orders during the second half of the year and many small machine builders went bankrupt and closed. The low-voltage motor drive market has been more affected than that for the medium-voltage drives, because of its greater dependence on machine builders. Nevertheless, with $3.1 billion in revenues in 2011, China still accounted for 25 percent of the world market for low-voltage motor drives."

The company says that ABB and Siemens are the market leaders in the Chinese low-voltage motor-drive market in 2011, with 16 percent and 13 percent share respectively. Market leadership is concentrated, as the top five suppliers accounted for nearly 46 percent of the total. However, there are many other suppliers, each with less than 1 percent of the total revenues.

Growth in the Chinese market will continue, because of implementation of policies regarding motor efficiency and energy-saving renovations in various industries. But market growth will be at a lower rate than in the past few years as investment is reduced in the near future, with concerns over high inflation in China.

The food and beverage (F&B) industry has been a major end-user of electric drives in Europe.  The economic slowdown had however an adverse impact on most industries, including the F&B one, impacting on the demand for electric drives. Current dynamics have heightened the need for energy-efficient, highly reliable and appropriate product customization.

Electric drives represent almost 2/3 of the energy consumption demand in the F&B industry. Surging energy prices have however had a negative impact on the performance of this industry. In this context, energy-efficient drives have helped companies reduce production costs, improve ROI and lower CO2 emissions.

“The F&B industry is becoming completely automated, resulting in increased power consumption during the production process,” states Frost & Sullivan Research Analyst Raaj Thilak Raveendran. “Companies are also looking to reduce their energy usage by implementing energy-efficient drive technology. Although expensive, energy-efficient drives provide high ROI and reduce operating costs – two advantages that will boost their uptake over the forecast period.”

Another important trend is the growing interest of OEMs in decentralized, rather than centralized, drives due to the reduced cost and project planning time they offer. Electric drive manufacturers are planning to launch new products in this segment, which will boost the sales of decentralized drives in the short and medium terms of the forecast period.

As the market expands, a major challenge will be intensifying competition. With over 100 drive manufacturers, there is relentless price pressure, resulting in eroding profit margins.

“Small participants face challenges like sizeable labor costs, eroding profit margins and industry consolidation,” adds Raveendran. “Market participants state that there is a price drop of 3% in electric drives every year, which affects the profit margins of all market participants.”

To succeed in this highly competitive market, manufacturers need to expand their product range or identify new applications for their existing products.

“Ease-of-use and cost efficiency are the two main advantages of electric drives in comparison to rival technologies,” concludes Raveendran. “Due to these advantages, electric drives have been able to find new applications. To sustain market momentum, manufacturers need to provide a complete range of products that suit the application requirements of both OEMs and end-users.”

Note: Frost & Sullivan says that the market earned revenues of €204.89 million in 2010 and estimates this to reach €313.14 million in 2017.

Despite the outlook for the Photo Voltaic (PV) manufacturing equipment market remaining bleak in 2012, a new report from IMS Research claims that there could be a 20GW opportunity for the upgrade or replacement of existing capacity over the next 4 years.

Revenue declines of over 65% are forecast for the PV manufacturing equipment market in 2012. However, there may be a bright spot: aging equipment requiring upgrade or complete replacement is where the majority of equipment revenues will come from in 2012. The research report found that this could provide a 20 GW opportunity for equipment suppliers, generating some $25 billion in revenues during the period.

Ingot, wafer, cell and module makers are all placing less importance on expanding production, and are instead focusing on increasing end-product quality and overall efficiencies. Utilization rates are at an all-time low and the current lull in new demand and capacity across the supply chain will provide a potential opportunity for PV makers to gain market share longer-term through upgrading equipment now.

A company representative said, “The inevitable market shake-out that will see less competitive product makers fall by the wayside, will stimulate further demand for equipment as existing manufacturing capacity goes offline. Manufacturing equipment companies that stand to benefit most are those that have a clear equipment upgrade strategy available to their customers. Furthermore, companies that will resist the shake-out best will be those who can go through these equipment upgrades with the least disruption, readying themselves for the time when end-demand does ultimately pick-up.”

Steady growth in the European control valves market was derailed by the global economic recession, resulting in a significant decline in sales in 2009. Fears of a double-dip recession caused sales to slump in 2010 as well.

The market has experienced a sluggish recovery in 2011, powered by demand from the food and beverage and power generation sectors. Promisingly, however, projects that had been put on hold during the recession are back on track. These, together with newly initiated projects, are expected to drive growth.

An increased focus on reducing maintenance costs and tighter pro-environment regulations are the two factors poised to boost market prospects.

“There is heightened emphasis on incorporating a diagnostic tool within the control valve, which would eliminate the need for periodic services as well as downtime due to maintenance problems,” explains Frost & Sullivan Program Manager Ashwin Annareddy. “This would also result in a revamping of the basic design of control valves, leading to a significant increase in sales.”

Regulations regarding environmental pollution are poised to become tougher in the coming years. This will impact the design of control valves and boost the sales of valves that promote environmentally sustainable practices across various end-user industries.

Investments in the food and beverage as well as the power generation industries are also set to fuel the uptake of control valves. At the same time, Central and Eastern Europe are anticipated to emerge as the primary geographical markets.

“Manufacturers should develop broad product portfolios that would satisfy the requirements of these end-user and geographical segments,” advises Annareddy. “This strategy would enable them to broaden their market reach as well as increase their penetration of these emerging geographical markets.”

A key challenge for European market participants has been pricing due to intensifying competition from Asian low-cost alternatives. This situation has been aggravated by budgetary limitations that have affected R&D initiatives.

“To assert their competitive dominance, European control valve manufacturers have to focus on developing innovative, high-quality yet cost-effective designs that meet end-user requirements,” advises Annareddy. “Value added services that would generate valuable income and enable companies to differentiate themselves from the competition would also be critical to long-term success.”

New analysis from Frost & Sullivan (http://www.industrialautomation.frost.com), Strategic Analysis of Control Valves in the European Market, finds that the market earned revenues of €496.5 million in 2010 and estimates this to reach €676.3 million in 2017. Rotating shaft and sliding stem-type control valves are the product segments covered in the research.

This from a new release from Pike Research:

"Because commercial buildings consume roughly 23% of all electricity globally, the automation systems that ensure efficient performance are a critical part of energy management.  Until the mid-1990s, modern building automation consisted of little more than individual systems with simple control panels for switches, timers, and alarms.  Today, the market for commercial building automation systems is in the midst of revolutionary change in terms of technology and utility.  In the last several years, the focus has shifted from an individual system view to a more holistic view so that the “building system” can be defined to include virtually any device or data source within the building.  The amount of data created by automation systems can be overwhelming, but real competitive and economic value exists in using the data to monitor performance and uncover trends.  According to a new report from Pike Research, the market for commercial building automation systems will double over the next decade, increasing from $72.5 billion in 2011 to $146.4 billion by 2021."

The complete release is here: http://www.pikeresearch.com/newsroom/global-revenues-for-commercial-building-automation-systems-will-reach-146-billion-by-2021

Industry Research Series - Current Focus: Batch and Specialty Chemicals

DrivesMag is working hard to better understand how automation, control and drives are currently being designed into and used in key industrial and manufacturing markets, assessing impact that they might have on the processes and value that they bring to users. Our focus this month is on the Batch and Specialty Chemical Markets.

If you are an expert in the field of chemical production, we'd like to ask you a few questions and will pay you for your time. Of course, we'll share our findings with you.

If you would like to participate in this study, please email us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it for a link. The survey should take no longer than 20 minutes to complete. When you have finished, you can choose to be paid $45 for your time, or to give the $45 plus a $10 matching donation from DrivesMag to one of three great charities. Your answers will remain anonymous and combined with answers from others in a final report that you can choose to receive. Nobody will contact you afterwards to sell anything.

Process Engineers have a wide choice of technologies and products at their disposal for custody transfer flow measurement, a transaction involving transporting physical substance from one operator. Newer flowmeter technologies such as coriolis and ultrasonic offer increased reliability, reduced pressure drop, and high accuracy. At the same time, flowmeter suppliers are making improvements in the performance of meters using more established technologies. Turbine flowmeters, for example, are being made with stronger bearings, offering longer life.

Paul Everett at IMS Research comments, “differential pressure (DP) flowmeters appear to be holding their own. DP flowmeters still have the largest installed base of any type of flowmeter, and customers appreciate the meters versatility to measure liquid, gas, and steam flows. Manufacturers have been very diligent in researching and developing technological improvements in their products”.

There are several flowmeter technologies available today; some are well established, whereas others are emerging. In its latest flowmeter report, IMS Research confirms coriolis flowmeters steady hold on the custody transfer market. Everett continues, “Coriolis meters are gaining industry approval for custody transfer of natural gas. In addition, several European standards organizations include coriolis meters on their list of meters approved for custody transfer. There is also a significant trend occuring in the production and use of ultrasonic flowmeters making the custody transfer market one to watch”.

Ultrasonic flowmeters used in custody transfer are growing at a faster rate than any other flowmeter type available today. Despite the rapid growth, differential pressure flowmeters still account for the largest share of a custody transfer, estimated to be worth some $500 million in 2010.

Drives are coupled with motor systems for one of two basic reasons: 1.) affinity laws promise greater energy efficiency when full speed operation isn’t required, or 2.) something about the process demands variable operation and control. Sometimes the needs are combined and the drive, or drives, become very important elements in a machine, building, water or factory system. This article will focus on energy efficiency.

Since the drive came into view as a green technology -- a tool to lower consumption and costs associated with energy -- the economics of drives have improved. For example, since 2001, the base costs of a drive, purchased, installed and operating, are flat or slightly down, while the electricity price paid by businesses is up.

As long as these two numbers move in the directions that they have been moving, more businesses will become drive owners, whether the people in them know what a drive is or not. It would seem to be a matter of necessity.

However, as competition increases, project budgets tighten, and economic trends remain volatile, small differences in energy performance matter. More importantly, service advantages among drive suppliers can be the difference between a selecting a smart, green system to start with, or regressing to full throttle operation in the interest of stretching limited construction funds. Drives are not ubiquitous, yet. In the U.S., 84% of motors are not yet drive controlled and in the E.U., 76% of motors are not drive controlled.

To try to understand why, we asked energy consultants to explain the challenges that they face specifying drives. The top two reasons: effort to predict energy ROI, and complex or custom application work.

Interestingly, those same energy consultants tell us that they struggle to prove energy payback concretely. While it is common practice among consultants to rely on drive suppliers to offer pre-sale predictions of energy performance and payback, it is rare that an installed drive is proven, through audit or performance testing, to be delivering on its economic promise.

More than 50% of consultants say that they have no idea if their projects payback and another 20% say that the payback estimate is proxy for compliance (but it shouldn’t be.)

So we think that 2012 will be the year of the audit. Watch as suppliers visit job-sites, parametric data, calculators and kW meters in hand, to show why drives are, and will be, crucial to reducing energy consumption, costs, and to lowering carbon footprint. And watch as consultants begin to demand that such services are included by, even required of, accepted suppliers in winning contracts.

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*We interviewed more than 190 mechanical and HVAC consultants and users of DASH Energy ROI Software in North America for this data.

Until 2009, Asia Pacific was still the smallest regional DCS (Distributed Control Systems) market, but it has grown quickly in the last few years, particularly in China and India. Although DCS revenues in EMEA and the Americas fell in the 2009 recession, the market in Asia Pacific still managed to continue to grow, despite a decline in Japan.  In this market, much of the revenues from Asia can be attributed to DCS hardware bought for greenfield projects, such as for addressing the energy and infrastructure needs of a growing population with more disposable income, and of continued urbanization in India and China.

An Analyst at IMS Research explains “Governments have been addressing the needs of the population with investment in various large-scale projects designed to provide more power and energy. This will be reflected in the above-average growth in DCS product revenues in the petrochemical, oil & gas, and power industries of the region. Plans in Asia Pacific to expand or install nuclear power capacity were much less affected than those of other parts of the world, by 2011’s Fukushima disaster in Japan. With higher disposable incomes, the demand for processed food and drink is projected to increase; thus sales of DCS for food and beverage processing equipment are also projected to grow at an above average rate. The investment in China is centered on its 12th Five Year-Plan, which addresses the growing need to shift China’s dependency on export to the development of an internal market.  In 2013, revenues in China from DCS products are projected to higher than those in Japan.”