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Frost and Sullivan report on European pumps market

02 November 2009

The pumps market in Europe enjoyed consistent growth, driven by high oil prices and the process industry boom, until the events of 2008 shook the market. Ram Ravi, research analyst of Industrial Automation and Process Control for Frost and Sullivan explores the opportunities the market holds today.

The pumps market in Europe has grown consistently, riding on high oil prices and the resulting boom in process industries. In 2008, the pumps market for process industries in Europe was valued at approximately $5 billion (€3.4 billion). However, with the onset of the economic crisis towards the end of 2008, the demand for pumps witnessed marginal decline in certain end-user industries, where projects were delayed or postponed due to the credit crunch.

Water and Power Sectors Offer Growth Opportunities despite Recession
With Europe’s major economies sinking into recession, industrial production in the region has declined across 2008-2009. Among the various process industries, the chemical industry and its sub-sectors will be the worst hit. With customers’ spending confidence anticipated to be low, this trend is expected to continue up to 2010. As a result, major pump suppliers have seen orders go down by nearly 30 per cent.

However, growth opportunities exist in the water and power sectors as many governments in Europe are directing a majority of the stimulus package towards infrastructural development.

The increase in demand for pumps from water and wastewater sector is attributed to the rising need for clean drinking water and proper sanitation in drought-affected regions such as Iberia, the United Kingdom and Italy. In addition, government regulations focused on improving standards and efficiency drive the need for upgrading existing water and wastewater plants, especially in eastern European.

Some key application areas offering opportunities are desalination and reverse osmosis. Although desalination is considered a high growth sub-sector, reverse osmosis is gaining prominence during the recession due to its comparatively low cost of production.

In the power generation industry, the target of reaching higher energy output levels by 2012 is expected to drive demand for pumps both in terms of new equipment sales and upgrades.

Further, enhanced focus on third-generation fuels production offers long-term growth opportunities in this sector. Currently, Western Europe leads the pump services market. However, with new entrants such as Romania and Bulgaria, Eastern Europe is rapidly developing and attracting more foreign investments across various end users.

Demand for Peristaltic, Rotary and Centrifugal Pumps
Life cycle costing and energy efficiency are key factors suppliers must stress on to sustain in this market during the recession. “As customers strive to cut down production costs, focus has shifted from initial product cost to total life cycle costs,” notes Ravi. “This coupled with increasing energy prices are boosting the adoption of energy-efficient pumps and systems.” The trend is expected to enhance growth prospects for peristaltic pumps among the various positive displacement pump types as it offers relatively better life cycle advantage to customers. Similarly, rotary lobe pumps are highly preferred for hygienic applications due to minimal contamination of the medium being pumped. Technologies such as multiphase pumping are expected to drive demand for screw and progressing cavity pumps.

In applications involving viscous fluids, positive displacement pumps such as progressing cavity and screw pumps are likely to replace centrifugal pumps purely on the basis of energy efficiency. Nonetheless, barring certain applications, centrifugal pumps still hold a major share of the total market. Overall, the trend towards automation will provide mid- and long-term benefits for the European pumps market, with customers expecting increasingly sophisticated solutions.

Energy Efficiency and Total Pump Management – Key to Short-term Sustenance
Given the current economic scenario, factors such as supply chain, product portfolio, lead times, service network and regional presence are crucial to grow in a bottoming market. Although there is a greater inclination towards upgrades and maintenance, customers do not seem to be in favour of stocking products. This leaves suppliers to focus on ready availability of products and minimising lead times. Extensive sales and service networks across the region will cater to this need. In the short term, suppliers must focus on enhancing product and service portfolios through the addition of intelligent pumps, energy-efficient products and strategic services that enhance sustainability in this market.

Ram Ravi is a research analyst with the Frost & Sullivan European Industrial Process
Control and Automation practice. He focuses on monitoring and analysing emerging trends, technologies and market dynamics in the Pumps, Valves and Compressors market in Europe.


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