Industrial equipment manufacturers are at a crossroads according to the Second Annual Survey on Global Operations by Accenture. For some, the market is barely growing. Industrial machinery, for example, experienced zero growth between 2000 and 2005. Other sectors -- electrical equipment; plant automation; and heating, ventilation and air conditioning (HVAC) -- had a compound annual growth rate of between 3.5% and 5.1% over the same time period.
The study shows that while the industrial equipment manufacturing market has already globalized, it must become yet more global in order to achieve high performance and thrive.
The analysis is based on a division of the industrial equipment industry into four categories: industrial machinery, electrical equipment, automation and heating, ventilation and air-conditioning.
Here are a few of the key findings:
- These markets are more or less evenly spread between three leaders: the U.S. (30%), Asia Pacific (33%) and Europe (27%).
- Industrial machinery is the largest component of the industrial equipment market (60%).
- More parts and materials are being sourced from low-cost areas such as China, India and Eastern Europe. These regions are themselves becoming viable markets for the same industrial equipment companies.
- Industrial equipment manufacturers show a marked preference for global operating strategies that put them close to their up-and-coming customer base.
Despite grim sales numbers, industrial equipment companies may actually face more emerging market opportunities compared to a handful of other industries, the survey found. This is due to the growing consumer strength in East Asia and Eastern Europe, which Accenture taps as the growing the most over the next two decades. Their research shows that strong consumer-spending increases will affect the four industrial equipment segments more or less equally. Between 2005 and 2010, projected growth levels include industrial machinery (4.1%), electrical equipment (4.1%), plant automation (5.8%) and HVAC (5.1%). In China alone, demand for electrical generators will increase by 33% between 2005 and 2010.
To see the survey click here.