Pumps & Systems, May 2008
The South Asian pumps market offers growth potential across the region. Malaysia, Singapore, Thailand, Vietnam, Indonesia, Philippines, Australia and New Zealand (among others) comprise this estimated $1.2 billion market.
Improvements and growth in industries such as chemicals, power and oil and gas are expected to drive the overall market revenues in the area. Furthermore, with environmental regulations increasing demand for high-end, sophisticated pumps, manufacturers must strategize to meet demands for quality, high performance, product development, effective service and competitive pricing.
Key Market Drivers for Growth
Demand for Increased Quality and Reliability
A consistent growth in pump demand from end users is anticipated through 2008 to 2014. End users expect longer life and higher reliability in industrial applications, so they demand pumps of improved quality and capabilities to drive their processes and help increase revenue growth rates. Manufacturers try to differentiate their products with technological advancements and improvements, which enables suppliers to command better price in comparison to standard designs and drive revenues.
Low Cost Benefits
The South Asian region remains highly competitive on a global level due to lower manufacturing costs. This will provide a boost for global manufacturers to move to this region and help local manufacturers flourish. Targeted export regions will mostly be Europe and North America.
Development and Growth in Key End User Industries
High growth in industries such as pharmaceuticals, as well as water and wastewater treatment, is expected to increase overall revenues in South Asian markets. Growth in the water industry will stem from the need for better management of water resources, including water recycling, rainwater harvesting, storage and improved irrigation processes. The chemicals and petrochemicals end-user industries expect to grow significantly in this region with more refining activity. The recent increase in oil prices will increase investments in the oil and gas recovery and distribution applications group, and drive demand during 2008 to 2014.
The Need to Provide Aftermarket Support and Value-Added Services
Manufacturers typically offer additional services and support to end users when they purchase a pump. Increased efforts in after-sales support and services have had an important impact on restoring end user confidence and renewing demand. Additional services, offered as an incentive or at a premium price, include installation, general service agreements, maintenance contracts and technical support. These services have contributed to improved end user confidence and should serve to support future demand in terms of replacement and upgrades, as well as engender end user loyalty for specific manufacturers.
Analysis by Product Segment
The South Asian market includes centrifugal and positive displacement pump types with a focus on submersible, multistage, rotary and reciprocating pumps designs. Centrifugal pumps constituted the single largest product segment in 2007, accounting for an estimated 62 percent of revenues. This segment has been witnessing a gradual decrease in market share due to its maturing technology and lack of significant product innovation.
On the other hand, the positive displacement pumps market-with an estimated market share of 32 percent-expects to increase gradually due to technological benefits and new product developments. The others segmented, with an estimated 6 percent of revenue contribution, include vortex and deep-well pumps (among others).
Analysis by End User and Application
The top three segments of end users ranked by market share include water supply, wastewater and chemicals. The highest growth opportunities come from the power industry with a growth rate of 5 percent in 2007. The chemicals industry, with a growth rate of 4 percent in 2007, is the second highest, followed by the oil and gas industry with a modest growth rate of 3.5 percent in 2007.
Competitive Trends
Several hundred companies compete in the South Asian positive displacement and centrifugal pumps market. Most competitors focus on offering one or two types of pumps. The market contains a number of major competitors present in all products, regional and application segments. With the ongoing consolidation trend, major medium and small-sized manufacturers may need to consider niche markets for continued growth. The major manufacturer's competitors will continue to have strategic alliances as ideal avenues expand their product coverage and reach.
The top three manufacturers in the centrifugal pumps market include KSB, Ebara and Grundfos. The top three manufacturers in the positive displacement pumps market include IDEX Corporation, Colfax Corporation and SPX Process Equipment. While these are all major global pump manufacturers, the market in this region is highly fragmented and creates opportunities for expansion for these key companies.
Conclusion
The centrifugal pumps, reciprocating pumps and rotary pumps markets are projected to enjoy steady revenue growth through the forecast period because all expect to benefit from growth in key applications areas, notably power generation, oil and gas, and chemicals.
Vietnam is projected to witness the highest growth, followed by regions such as Singapore, Thailand and Australia, which expect to be the most important regions in terms of revenue share because of their well-established and strong industrial bases.
The key to success in this market is the ability to understand the requirements of end users and to develop optimum product solutions in these industries. Manufacturers that offer the best value-added services will likely benefit the most. Furthermore, manufacturers that anticipate and develop innovative and price competitive solutions that uniquely satisfy end user demands and put an extra effort into building lasting relationships will experience more success in this market.
Dushyant Mehra is a senior research analyst for Frost & Sullivan, 7550 IH 10 West, Suite 400, San Antonio, TX 78229-5616, 877-463-7678, Fax: 888-690-3329, www.frost.com.