Suppliers of Affordable Variable Speed Drives Likely to Hold an Edge in Cost-Conscious Market

PALO ALTO, Calif.--June 8, 2004--North American manufacturers of variable speed drives (VSDs) have to contend with a shrinking client base. This is because original equipment manufacturers (OEMs) -- the core customers of the VSD market -- are shifting production to newly industrialized countries.

New analysis from Frost & Sullivan (http://www.industrialautomation.frost.com), North American Variable Speed Drives Markets, reveals that this market generated revenue of $1.54 billion in 2004. Total market revenue expects to reach $1.73 billion in 2010.

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants an overview of the latest analysis of the North American Variable Speed Drives Markets, then send an e-mail to Melina Gonzalez - Corporate Communications at melina.gonzalez@frost.com with the following information: your full name, company name, title, telephone number, fax number and e-mail. Upon receipt of the above information, an overview will be sent to you via e-mail.

Emerging nations' benefits of improved productivity and lower manufacturing costs encourage OEMs to establish foreign subsidiaries and factories. Even while fostering greater global penetration, this move is depleting the North American end-user market.

"The OEMs seek component sources closer to the countries where their facilities are located and this reduces demand for variable speed drives in the domestic market," says Frost & Sullivan Industry Analyst Liliya Navarrete.

Due to the transfer of activities Several North American drives, plants have either shut down or restructured to produce smaller volumes. To retain business, manufacturers have to develop strategies to meet customers' overall needs -- both locally and internationally.

Cost reduction is one way of staying competitive in the mature VSD market, especially since features and capabilities provide little advantage as differentiating factors. Intense competition between manufacturers is fermenting price wars, making the products more affordable and encouraging adoption.

By catering to customer demand for lower prices, manufacturers are popularizing specialized designs and higher power rating levels. Meanwhile, client requirement for shorter lead times is likely to compel VSD companies to invest in R&D as well as equipment of greater efficiencies to trim the production process.

Although the price cuts expect to drive down revenue, it encourages companies to switch to variable speed drives for new installations and upgrades, stepping up unit sales. This anticipates having a positive impact in the long term.

The downward pressure on prices is likely to escalate as more participants enter the market and vie to provide the best products at the most attractive prices. This influx of next-generation products every four years has led to early replacement of drives.

Frequent introduction of advanced technology has stimulated manufacturers' ingenuity. They have been working on raising the bar on the cost-efficiency and quality of VSDs in a bid to increase uptake of their products.

"Manufacturers have to strive to engineer new solutions that will help increase product value and customer service," notes Navarrete. "This move is all the more significant considering clients are seeking technological improvements to increase productivity and efficiency in the wake of economic recovery."

These initiatives coupled with provision of simpler and faster solutions have accelerated demand for VSDs in new applications. The simplicity of solutions minimizes the requirement for extra features, thereby reducing potential additional costs and promoting unit shipment growth.

The North American Variable Speed Drives Markets, a part of the Motors and Drives subscription, provides a comprehensive analysis of the various market trends and opportunities for sophisticated technologies across a range of applications. The research covers the main product areas of alternate current and direct current, hydrostatic, and mechanical variable speed drives technologies. Interviews and executive briefings are available to the press.

Frost & Sullivan, an international growth consultancy, has been supporting clients' expansion for more than four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes custom strategic consulting, market intelligence and management training. Our mission is to forge partnerships with our clients' management teams, to deliver market insights, and to create value and drive growth through innovative approaches. Frost & Sullivan's network of consultants, industry experts, corporate trainers and support staff spans the globe with offices in every major country.

North American Variable Speed Drives Markets

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The following is a key list of industry participants: A .O. Smith, ABB, AC Technology Corp., Acorn Technology Corp., Advanced Micro Controls Inc., Advanced Micro Systems Inc., Andantex USA Inc., Applied Motion Products, Aromat Corp., Baldor Electric Co., Bardac Drives Partners, Bosch Rexroth, Boston Gear, Cleveland Gear Co., Cleveland Motion Controls, Copley Controls Corp., Dana Corp., Denison International PLC, Eaton Electrical Inc., Emerson Electric Co., Eurotherm, Fincor Automation Inc., Flender Corp. USA, Galil Motion Control Inc., General Electric Co., Hagglunds Drives AB, Hi-Lo Manufacturing, Intelligent Motion Systems Inc., International Rectifier, Kawasaki, Kollmorgen, Lenze Power Transmission, Linde AG, Lovejoy, Magnetek Inc., Martin Sprocket & Gear Inc., Maurey Manufacturing Corp., NORD, North American Hydraulics Inc., Oriental Motors U.S.A Corp., Pacific Scientific, Parker Hannifin Corp., Renold USA, Robicon Corp., Rockwell Automation Inc., Sauer-Danfoss, Schneider Electric, SEW-Eurdrives Inc., Siemens Energy & Automation Inc., Speed Selector, Sterling Electric Inc., Sumitomo Machinery Corp. of America, Superior Electric, TB Wood's Inc., The Oilgear Co., Toshiba America Inc., Yaskawa Electric Corp.

Keywords in this release: Variable speed drive, VSD, North America, original equipment manufacturer, OEM, price war, higher power rating levels, alternate current, direct current, hydrostatic, mechanical variable speed drive technologies, research, information, market, trends, technology, service, forecast