Advanced technologies anchor growth in European pumps market

Sluggish growth has characterized the mature European markets for centrifugal and turbine pumps in recent years. Now, however, rising demand for advanced technologies, improvements in selected application sectors and strong growth potential in Eastern Europe are set to underpin a modest expansion in revenue levels from current estimates of US$3.41 billion to US$4.13 billion in 2010...

LONDON, Aug. 24, 2004 (PRNewswire) -- Sluggish growth has characterized the mature European markets for centrifugal and turbine pumps in recent years. Now, however, rising demand for advanced technologies, improvements in selected application sectors and strong growth potential in Eastern Europe are set to underpin a modest expansion in revenue levels from current estimates of US$3.41 billion to US$4.13 billion in 2010.

Increased end-user demands for more reliable, higher performance and better quality pump equipment are compelling manufacturers to offer advanced products. Unlike the competitively priced standard designs, such value-added solutions are allowing manufacturers to charge premium prices and boost profits.

In keeping with this trend, advanced technologies such as submersible and seal-less pumps are expected to display strong revenue growth. While seal-less pumps are expected to account for 13.6% of revenues in 2010, submersible pumps are poised to corner 22.4% of overall revenues. These are just some of the findings presented in a new study by Frost & Sullivan, an international market research and growth management consultancy.

Heightened demand from certain application sectors is further supporting market growth. For instance, as countries seek to upgrade water resource management, significant investments are being made in the municipal water industry. At the same time, many Eastern European countries are undertaking large-scale investments in new water and wastewater facilities. Such activity is set to boost demand for centrifugal pumps.

Not surprisingly then, the largest end-user sector in 2003 was the municipal water and wastewater market, which accounted for 22.0% of revenues. Supported by rising investments in water management initiatives, its contribution to overall market revenues is expected to increase to 23.8% in 2010. Other end-user sectors offering scope for improved revenues include oil, gas and petrochemicals, food and beverage and power generation.

Despite exhibiting low growth potential, Germany is still likely to remain the largest region in terms of annual demand. Anticipated high investments across the customer base are set to position Iberia and Eastern Europe as the best performing markets in Europe. Eastern Europe, in particular, is projected to be the fastest growing regional market.

Post EU accession, the industrial growth rate in Eastern Europe is expected to accelerate and as the industrial base develops, demand for centrifugal pumps should build. This driver is expected to have a medium impact in the short term and then gradually increase in intensity over the longer term.

Such positive signs notwithstanding, strong competitive pressures continue to typify the mature centrifugal and turbine pumps market. With many pump manufacturers offering standardised, commodity products, customer power has increased and price has become the only differentiator. Manufacturers are, therefore, being forced to supply good quality, but extremely competitively priced pumps that have eroded profit margins.

Frost & Sullivan believes that product improvements are seen to be crucial in helping manufacturers differentiate their own offerings from the competitors', provide more value to the customers and gain premium prices.

In a mature market, competitors should look at further enhancing their overall position by
focussing on refining and advancing their own products so as to offer the customers better and more efficient technology, the study urges. Improvements in pumping technology may be in terms of better materials of construction, higher capacities or advanced pumping systems. This will help drive demand and replacement sales.

A limited number of major companies control a market teeming with over 300 participants. The top three manufacturers -- KSB, ITT Industries and Grundfos -- accounted for an estimated 38.1% of the market in 2003. This is followed by Flowserve and Wilo-Salmson.

Such high levels of market concentration have left small firms with an increasingly small share of the market, intensifying competitive pressures. This has been compounded by a spate of mergers and acquisitions such as KSB's of Bombas Itur and DP Industries, Weir's of Allen Gwynnes Pumps and Grundfos' takeover of Sarlin and Hilge. The challenge of increased consolidation has underlined the need for small and medium sized manufacturers to come up with appropriate strategies.

As the market becomes more consolidated, leading competitors will need to look to market niches for further growth while smaller competitors may also view strategic alliances as ideal avenues to expand their product coverage and reach," the study concludes.

Product segments under review in this study include multi stage radial flow pumps, axial and mixed flow pumps, submersible pumps, circulator pumps, seal-less pumps and turbine pumps.


Frost & Sullivan, an international consultancy firm, has been supporting clients' growth for over four decades. Our market expertise covers a broad spectrum of industries, while our portfolio of advisory competencies includes strategic consultancy, market intelligence and management training. Our mission is to work with our clients' management teams to deliver market insights and to create value and drive growth through innovative approaches. Frost & Sullivan's network of more than 500 consultants, industry experts, corporate trainers and support staff spans the globe with 19 offices worldwide.

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