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The Global Economic Slump and Reduced Capital Expenditure Decrease the Demand for AC Drives in South Africa Finds Frost & Sullivan - The economic downturn has adversely affected the demand for alternating current (AC) drives in South Africa, particularly in the metals and mining market segment. This segment estimated to account for 48 per cent of the total revenues in this market
The Global Economic Slump and Reduced Capital Expenditure Decrease the Demand for AC Drives in South Africa Finds Frost & Sullivan

 

NewswireToday - /newswire/ - Cape Town, South Africa, 2010/05/03 - The economic downturn has adversely affected the demand for alternating current (AC) drives in South Africa, particularly in the metals and mining market segment. This segment estimated to account for 48 per cent of the total revenues in this market.

   
 
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Similarly, the manufacturing sector, which includes the automotive, food and beverage, pulp and paper and metals and general manufacturing, is expected to witness a deteriorating capital investment trend between 2009 and 2011. However, due to the diversity of the sectors included in manufacturing, some sectors such as food and beverage are expected to witness strong capital investment from 2009 to 2011.

New analysis from Frost & Sullivan (industrialautomation.frost.com), Strategic Analysis of the South African AC Drives Market, finds that the market earned revenues of $63.1 million in 2008 and estimates this to reach $115.6 million in 2015.

If you are interested in more information on this study, please send an email to Patrick Cairns, Corporate Communications, at patrick.cairns[.]frost.com, with your full name, company name, title, telephone number, company email address, company website, city, state and country.

"Since 2005, there has been a steady increase in the number of electric drives sold in the South African market due to the wide acceptance of AC motors which are increasingly replacing direct current (DC) motors," says Frost & Sullivan Industry Analyst Litiya Matakala. "Furthermore, AC drives are priced much lower and are more efficient than DC alternatives, with greater savings in terms of energy efficiency and maintenance costs compared to alternatives such as soft starters."

The demand for AC drives is expected to be high from 2011 to 2015, as capital investment is likely to return to normal. Furthermore, the high number of refurbishments and upgrades postponed over 2008 and 2009 is expected to lead to an increase in demand.

However, there is a fierce competition with more competitors battling for fewer customers. At the same time, increased product commoditisation is making it difficult to differentiate products offered by major market participants. This is expected to further impel suppliers to reduce prices. There is likely to be a concentration of larger participants leading the market in the long term, with the niche market participants occupying specific sectors.

"Limited growth opportunities are anticipated to increase the level of competition, which in turn will exacerbate price reductions," explains Matakala. "Suppliers need to have a broader product offering and specifically, those offering electric motors are more likely to obtain a greater market share, putting additional pressure on the smaller market participants."

Competition will remain high from 2011 to 2012, as suppliers jostle for market share in a recovering economy. Price penetration and niche focus strategies are anticipated to increase over this period.

"Although the market is dominated by a few well established multinational companies, there are opportunities for new entrants due to the price sensitivity of end users as well as increased product commoditisation," concludes Matakala. "Market opportunities exist for suppliers with industry specific applications as well as low-cost drives manufacturers who can offer products at significantly lower prices than other participants."

Strategic Analysis of the South African AC Drives Market is part of the Industrial Automation & Process Control Growth Partnership Services programme, which also includes research in the following markets: South African Switchgear Market, South African Electric Motors Market, South African Pressure Sensors Market, and South African HMI Market. All research services included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants.

About Frost & Sullivan
Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth and achieve best-in-class positions in growth, innovation and leadership. The company's Growth Partnership Service provides the CEO and the CEO's Growth Team with disciplined research and best-practice models to drive the generation, evaluation, and implementation of powerful growth strategies. Frost & Sullivan leverages over 45 years of experience in partnering with Global 1000 companies, emerging businesses and the investment community from 40 offices on six continents.

Strategic Analysis of the South African AC Drives Market / M505

 
 
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The Global Economic Slump and Reduced Capital Expenditure Decrease the Demand for AC Drives in South Africa Finds Frost & Sullivan

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