Pricing Emerges as Key Competitive Differentiator in Low Voltage Switchgear and Fusegear Market.

Energy Editors/Business Editors

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

Robust demand in its core areas of commercial and industrial applications will maintain momentum behind sales in the well-established European low voltage switchgear and fusegear market, according to latest findings by Frost & Sullivan. The sheer size of the market and the breadth of products are indicative of the diversity and the substantial customer base in the European low voltage switchgear fusegear market.

In future years, rising replacement and upgrade activity, coupled with growing demand from large sized customers in key regions are expected to give the industry new impetus. Advancing from its total revenue level of $6.07 billion in 2002, the overall European low voltage switchgear and fusegear market will reach $7.14 billion in 2009.

Increasingly fierce competitive forces, compounded by the difficult economic conditions and the subsequent decline in investor confidence and delay in investment, have influenced pricing strategies for low voltage switchgear and fusegear components. Revenue development in this industry has, to a large degree, been determined by falling prices.

Nevertheless, technological advancements in some product areas of the overall low voltage switchgear and fusegear market signal potential for an acceleration in the uptake of value-added products, helping some companies to carve a profitable niche in the field of value-added, higher specification products.

"While the majority of the demand remains focused on standard products, the widening appeal of higher specification alternatives will enable some companies to capture a larger share of the market," highlights Sean French, Industry Analyst at Frost & Sullivan. Nevertheless, in most areas core sales are still associated with low technology components sold in large quantities.

In today's low voltage switchgear and fusegear market, the once strong bond between a customer and supplier now rarely exists. "Customers have a large choice of suppliers when selecting a product to meet their specific needs due to the increasingly complex spectrum of available product ranges. In light of the huge variety of products, customers can afford to be more discerning. This trend places mounting pressure on manufacturers to produce higher-quality products to ward off competition."

Addressing the issue of safety, which has historically played a pivotal role in the development of this market, Mr. French reports that European legislation has forced companies to maintain certain minimum standards. "Demand has benefited from active safety concerns in key end user groups. As safety issues become more important across industry in general, demand for low voltage switchgear and fusegear products can be expected to advance," he asserts.

The moulded case circuit breakers sector was the largest single sector, accounting for 20.6 percent of the total revenues from the low voltage switchgear and fusegear market in 2002. Miniature circuit breakers were the second most important product segment, with contractors ranking in third position.

Miniature circuit breakers are increasingly the component of choice, superseding fusegear, which is forecast to see the largest decline in importance in future years. Miniature circuit breakers are cheap and versatile and this has made the technology the customers' favoured choice for many industrial and commercial applications. Lower overall growth is projected in the fusegear and rotary switches sectors as users shift to alternatives.

Customers in the European low voltage switchgear and fusegear market are increasingly looking to source all components from a single supplier or distributor. This trend has favoured larger competitors in the European low voltage switchgear and fusegear market as smaller competitors generally lack the resources to match the comprehensive product line-up of these companies.

Currently, this has resulted in the success of several large manufacturers able to compete across all the product segments. Some competitors have embarked on an expansion and acquisition drive and further activity in this area is expected to characterise this marketplace during the forecast period, as manufacturer attempt to build a strong product portfolio able to meet the rising demands of the customer for all products to be purchased from a single source.

Manufacturers that fail to expand their overall coverage can be expected to see enhanced pressures in terms of gaining and maintaining orders and customer loyalty, Frost & Sullivan's study warns.

Schneider Electric was the European market leader with an 18.2 percent market share in 2002, followed by Siemens and ABB Over the last few years, competitive developments in the European low voltage switchgear and fusegear market have been affected by the aborted merger of Schneider Electric and Legrand. The strategic implications have influenced all competitors in the European low voltage switchgear and fusegear market, because of Schneider's leading position.

Despite the potential pressures of the results of the aborted merger, Schneider has been able to further enhance its overall standing, while other leading competitors have been unable to capitalise on the situation. Other leading suppliers, including Siemens, ABB Moeller and Rockwell Automation, will all have to further review their strategies as they aim to regain or build market share.

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: B234