North American Pneumatic FRLAs Markets Impacted by Consolidation and Outsourcing

PALO ALTO, Calif.--March 15, 2005--Consolidation and outsourced manufacturing among its end-user industries impacts the pneumatic filters, regulators, lubricators and accessories (FRLA) industry on a large scale, curtailing growth and demand.

New analysis from Frost & Sullivan (http://www.motors.frost.com), North American Pneumatic Filters, Regulators, Lubricators and Accessories Markets reveals that revenue in this market totaled $1,125.0 million in 2004 and projects to reach $1,454.9 million in 2011.

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 Pneumatic Filters, Regulators, Lubricators and Accessories Markets -- then send an email to Trisha Bradley -- Corporate Communications at trisha.bradley@frost.com with the following information: your full name, company name, title, telephone number, fax number and email. Upon receipt of the above information, an overview will be sent to you via e-mail.

There has been a significant increase in acquisitions and consolidations in the pharmaceutical, medical, and petrochemical sectors as companies try to become bigger to better overcome the difficult market conditions. This includes extensive restructuring and even closing down of plants that are not profitable. As a result, the domestic consumer base reduces, restricting growth in pneumatic revenues.

The downswing increases by companies outsourcing manufacturing to less expensive locales in the Asia Pacific region.

"The difference in the average wage of $19 per hour for a U.S. worker versus the wage of 50 cents per hour for a Chinese worker continue to create significant incentives to move production capacities there," explains Frost & Sullivan Research Analyst Laurel Donoho. "Other inducements, such as a more relaxed regulatory environment, make the exodus understandable, if not desirable."

Despite such efforts to minimize costs by outsourcing production, labor still forms the largest cost factor. However, potential growth from industries such as materials handling and semiconductor industries, which have resisted the consolidation trend so far, is an encouraging factor.

Rising prices of raw materials, such as steel and oil, trouble the FRLA's industry. Growing economies cause inflation world over, especially in countries in Asia, such as China and Latin America and is thus leading to significant boosts in input costs for most industry sectors.

"Some industries, such as automotive, can pass price increases on steel to car buyers as operational costs increase," explains Donoho. "However, in the FRLAs markets, many manufacturers concede that they are not in a position to levy significant cost increases because of the continued lackluster demand in North America."

All these factors are combining to create an intensely competitive and stressful atmosphere in the FRLAs industry. Consumers are using the strong competition to leverage prices to their advantage. Most companies are walking the fine line between balancing the price inflation and competitive end product pricing.

"Participants are reassured by the anticipated improvement in the economies of North America, Mexico, and Canada, along with the performance of key industry user segments, which are expected to bring some nominal growth back to the industry in the near future," concludes Donoho.

The North American Pneumatic Filters, Regulators, Lubricators and Accessories Markets is a part of the 9937 subscription. This Frost & Sullivan research service studies the scenario in the United States, Canada, and Mexico -- current market challenges, restraints, drivers and trends, and competitive issues. The research is segmented into the various product types such as the pneumatic filters, regulators, lubricators, and accessories (including couplings, tubing/hoses, soft start valves, and fittings). Executive summaries and analyst interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community, by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit http://www.frost.com.

North American Pneumatic Filters, Regulators, Lubricators and Accessories Markets

F170

Keywords in this release: pneumatic filters, regulators, lubricators, accessories, North America, FRLA, pharmaceutical, medical, petrochemical, materials handling, semiconductor, automotive, Canada, Mexico, research, information, market, trends, technology, service, forecast