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News Release from: Frost and Sullivan
Edited by the Manufacturingtalk Editorial
Team on 05 February 2002
Welding automation sparks consumables
growth
A new study by Frost and Sullivan is optimistic about the future of the welding consumables market, despite the many challenges in the road ahead.
A new study by Frost and Sullivan is optimistic about the future of the welding consumables market, despite the many challenges in the road ahead Already, manufacturers are looking to explore new avenues of growth
This article was originally published on Manufacturingtalk on 28 Apr 2004 at 8.00am (UK)
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The need for increased productivity, higher performance levels, and improved product quality is expected to drive the market.
To this end, there is likely to be a move toward automated machinery which, in turn, is expected to support further growth in the use of solid and flux cored wires over the next few years.
Another key growth opportunity is likely to be presented by new manufacturing materials such as aluminium and stainless steel.
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These are likely to signal the need for new welding consumables that are composed of metal alloys, and are anticipated to create small, yet high growth markets for alloy consumables.
Research Analyst Ozan Dogruer explains: "These trends present important opportunities that should be exploited.
However, this growth may cause other applications in the market to contract, as the market is already near saturation and unable to support excess growth." The study found the European welding consumables market displayed stable growth in revenues from $941.7 million in 1998 to $1.02 billion in 2001.
Revenues are forecast to rise to $1.24 billion in 2008.
The revenue growth rates of individual product segments show wide variations.
The most promising growth is likely in the solid wires and flux cored wires market segments, based on the trend toward automation.
Conversely, oversupply in the former and the decline of a primary end-user, the shipbuilding industry, in the latter segment are likely to act as a restraint on market development.
In future, welding manufacturers will have to focus on constant improvements in productivity and cost effectiveness to ensure continued market growth.
"Greater efforts have to be made to promote the use of welding in manufacturing processes.
This will require vast improvements to the safety, productivity, cost, and quality of welding consumables", explains Dogruer.
The welding consumables market is wrestling with two interrelated issues, falling prices and the migration of manufacturing projects to eastern Europe and Asia.
Prices of welding consumables have declined sharply over recent years, partially due to the influx of cheap imports from Asia and eastern Europe; and partly because of the surplus of solid wires in the market.
The downward trend in prices is expected to continue for the medium-term, restraining potential revenue growth and squeezing profit margins.
In addition, a significant proportion of welding and manufacturing projects have shifted to eastern Europe over the past few years, due to the lower costs of production and labour in this region.
This has caused market growth to slow down and competition to intensify, placing greater downward pressure on prices and thus limiting revenue growth.
However, end-users are expected gradually shift away from the low-cost, inferior quality products produced in eastern Europe.
Increasingly, the key competitive factors that are likely to be critical to success are price, quality, value, reputation, and the development of close customer relationships driving the user back to traditional western Europe companies.
At present, the market is very concentrated with the top three companies--ESAB, Air Liquide, and Bohler Thyssen--accounting for the majority of market revenues.
They are expected to continue consolidating to strengthen market shares.
"Flat market growth has made acquisition the most effective method of achieving greater market penetration", observes Dogruer.
Other strategic recommendations highlighted in the report include the impact of e-commerce, which is anticipated to fundamentally change the way in which business is conducted and offer considerable benefits to both suppliers and customers.
E-commerce will enable suppliers to cut costs, streamline the supply chain and broaden their reach of the market.
However, the study also highlights the need for all manufacturers to remain close to their customer base.
Report Code: B050.
Publication Date: January 2002.
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