Pneumatic Motion Control Components Industry Shows Steady Expansion.

Business Editors/High-Tech Writers

LONDON--(BUSINESS WIRE)--Nov. 17, 2003

The integration of electronics and sensors with pneumatic motion control components is enabling pneumatic machines to keep pace with main rivals -- electric machines. At the same time, simple, user-friendly technology is giving pneumatic systems an edge over more complex electric counterparts. Price declines and relocation of manufacturing facilities from Europe to emerging nations, however, threaten to impede market growth.

"The major drawback of pneumatic components to the end-user is that these are inaccurate when compared to electric machines. Once accurate and repeatable positioning can be achieved, the encroachment of electric machines will be eliminated in most applications," notes Frost & Sullivan (http://www.frost.com) Analyst George Turnage.

Fortuitously for manufacturers, the growing assimilation of electronics with pneumatic components is likely to result in economical, hybridized systems that facilitate improved position control and better information feedback. The integration of sensors is expected to further advance positioning possibilities.

Apart from the significant outlays and sophisticated skill sets needed to maintain electric machines, the costs of programming and maintaining such systems is also considerable. In contrast, pneumatic components are increasingly identified by simple designs, easy-to-use technology and low maintenance costs.

"Pneumatics are less expensive than electromechanical alternatives and cleaner than hydraulic machines; pneumatic equipment is invariably the first choice of companies looking to automate a production process," says Turnage. "Furthermore, as labour costs in Europe continue to increase, the trend towards process automation is expected to remain strong for the purpose of cost control."

Automation is seen as offering the benefits of extended work schedules, fewer personnel, and lesser overheads. This inevitable transition from human labour to automation is likely to boost uptake of pneumatic motion control components across the entire industrial sector.

New applications in the packaging industry are generating insatiable demand for pneumatic components. With a continual and ever-expanding stream of new products needing to be packaged, the requirement for pneumatic components is set to rise.

Supported by these trends, the European pneumatic motion control components market is well on course to emerge from its 2002 slump. Steady growth patterns are forecast from 2003 onwards with the market poised to expand from EUR 1,266 million to EUR 1,537.8 million in 2009.

With the greatest number of applications, the ISO/VDMA segment represented the largest percentage of revenues for the total market at 40.7 percent in 2002, followed by rotary actuators. Both segments are expected to maintain their respective positions as the largest contributors to revenues over the long term. These segments will be followed by air bellows/air springs, grippers, vacuum components, shock absorbers, slide actuators, rodless actuators and non-repairable actuators segments.

Despite optimistic forecasts, decreasing prices of pneumatic systems pose a critical restraint to maximizing revenue growth. Intensifying competition has underlined price degradation with the entire market likely to suffer as manufacturers increasingly focus on price, rather than on quality or features.

Price competition is likely to transform the actuators market into a commodity-type market, and provide end-users greater leverage in influencing product prices. A pricing strategy coupled with a skilled direct sales-force is seen as key to addressing this challenge and capturing market share within a short period. A prominent example of this focused strategy has been the exceptional growth experienced by SMC, a price leader in the market.

Sounding a warning to smaller manufacturers, Turnage notes: "The trend to consolidation has been fortified by the overall strength of the full line international manufacturers like Festo, Bosch/Rexroth and Parker Hannifin. As these 'juggernauts' continue to attract existing pneumatics users as well as new customers, it is expected smaller manufacturers may find it difficult to survive."

Although the industry is decidedly upbeat, the shift of manufacturing facilities from Europe to emerging nations is an ongoing cause for concern. Cheaper labor costs in Asian regions translate into lower manufacturing costs and ultimately cheaper end products. Unable to compete with Asia-based competitors on price, European manufacturers stand to lose market shares.

While such challenges will have to be addressed sooner rather than later, there is no doubt that steady growth is on the cards. A focused pricing strategy, training and support of distributors and acquisition of a complete product line will be the three critical tools of market success, concludes Frost & Sullivan.

Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies include custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff, spans the globe with offices in every major country.

Publication Code: B209