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Years of low growth keep medium voltage motor market in recovery mode

A welcomed 10.4% growth in revenues and healthy unit growth in 2011 has been overshadowed by a return to reality in 2012: the Eurozone continues to emerge from a prolonged recession and the Chinese industrial juggernaut showed signs of slowing late in the year.

During the year, the global medium voltage (MV) motor market was estimated to be worth US$5,681 million, and grew by a modest 6.6% in revenues, with unit growth significantly lower than expected.

The global market has been buoyed to a certain extent due to the unconventional oil and gas boom in North America; one of strongest and most robust regional sectors that is thought to be sparing the global market from recession-like growth below 5%.

Revenues reported for the first three quarters of 2013 suggested similar market performance to 2012 was to be expected.

Global revenues in 2012 have not yet surpassed the pre-recession level of 2009. The constraints in the global market were characterised by low growth of 2.8% in the EMEA, with unit growth of 0.8% compared to 2011. 2013 fared slightly better in the EMEA.

A slowdown of the Chinese industrial engine spilled into 2013 and contributed to keeping global growth at a modest rate. Compounding problems further, the global mining industry, a high-volume market for MV motors, suffered a massive slowdown in 2013 when investment dollars for mining projects dried up almost completely.

It is expected that the global market will regain steam in 2015 and 2016 after weathering a short-term storm of post-recession difficulties.

During 2012, it is interesting to note from a unit volume perspective that traditionally high-throughput power rating segments, namely asynchronous machines of 1.5MW to 6MW with average selling prices (ASPs) of $100k or less, experienced lower growth than in previous years (not counting the recession year of 2010), while higher-power rated segments of 7.5MW and above experienced higher than average unit growth.

IHS Analyst Mark Meza states, “Even though capital expenditures for MV motors remained tight in 2012, more expensive MV motor segments, namely high-powered synchronous machines that usually grow at modest levels grew at double-digit rates.

Because these machines have ASPs ranging from US$700k to US$1,300k, this has caused an unusually high spike in ASPs in some sectors even though overall global unit volume is very low.”

There is sufficient evidence that synchronous machines of higher power densities are slowly displacing asynchronous machines in some industry sectors.

Meza adds, “This has been an ongoing trend we have been seeing, and it is interesting that the economic and sector difficulties seen in 2012 and 2013 have not slowed the trend towards synchronous MV motors.”

Despite continuing challenges in the Eurozone and China in 2012 and 2013, the Americas region, particularly the North American oil and natural gas sector, is booming like never before due to “fracking’ technologies that are extracting fossil fuels from areas that were previously deemed too difficult and too expensive to reach.

In addition, the chemical and petroleum byproducts sectors are benefitting from this boom as well, as feedstocks that drive these sectors are currently at high levels. The region, especially the US, is set to become the largest exporter of natural gas for the remainder of the decade and possibly beyond.

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