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STRONG SHIPBUILDING AND OFFSHORE SECTORS IN EAST ASIA BECKON WESTERN EUROPEAN METALLIC WELDING EQUIPMENT AND CONSUMABLES MANUFACTURERS
With a 42.8 per cent share, western Europe is the largest revenue contributor to the $620.5 million market for metallic welding equipment and consumables in shipbuilding and offshore applications. However, stagnation in the western European shipbuilding and offshore sectors, as well as the relocation of shipbuilding activity to regions with cheaper manufacturing costs, are likely to compel strategic reassessments by western European manufacturers. Motivated by lower labour and material costs, shipbuilding activities are continuing to move to developing regions such as eastern Europe and China. Even as these regions expand their share of market revenues, significant growth in offshore oil exploration could boost new investments in the region, particularly in China. Building an international presence, therefore, offers western manufacturers a way to avoid mature domestic markets. 'As production capacity shifts to developing regions such as eastern Europe and Asia, it is becoming increasingly important for equipment and consumable suppliers to support these operations with a local presence, to provide support and a point of contact,' states Frost & Sullivan (http://www.frost.com) Research Manager Mik Sabiers. 'Manufacturers that do not follow this trend stand to miss out on significant growth opportunities and risk becoming trapped in market stagnation.' However, cultural barriers and the dominant competitive presence of Japanese and local companies could pose obstacles to penetration in East Asia. 'European manufacturers are still renowned for their quality and innovative technologies, which should provide some support in penetrating these foreign markets,' says Mr. Sabiers. 'At the same time, companies wishing to concentrate on their local markets are expected to guard their positions fiercely and expand either through acquisition or raw competitive strength,' he adds. By 2010, China is poised to overtake western Europe as the largest revenue generating region in the total market, with an estimated 37.1 per cent share. With 34.9 per cent, western Europe is expected to be pushed back into second place, trailed by North America and eastern Europe. Stimulated by strong growth in eastern Europe and China and by ongoing shipyard modernisation programmes in the west, the world market for welding equipment and consumables in the shipbuilding and offshore industry is forecast to rise from $620.5 million in 2003 to $751.3 million in 2010. Rising demand for transport, containers and cruise ships due to expansion of international trade and tourism are also set to aid overall market growth. Essential improvements and upgrades to existing production equipment used in shipyards is also expected to raise demand. Investment in new welding equipment offering significant productivity and efficiency gains is also expected to rise with rapid adoption of advanced technologies, such as laser welding, twin arc and friction stir welding, hybrid arc welding and welding robots anticipated to add momentum to overall revenue growth. Several promising offshore gas exploration efforts are likely to offset the current stagnation in the offshore sector. Over the long term, this could lead to the construction of more oil and gas rigs and offshore platforms, presenting opportunities for market expansion. Supported by potential new construction and maintenance and repair applications in the shipbuilding and offshore industry, and the production of new ships and offshore facilities, consumables are expected to maintain their position as the largest revenue generating product segment, accounting for 53.5 per cent of overall revenues by 2010. Disappointing performances by the arc welding equipment, resistance welding equipment and gas cutting and welding equipment segments are likely to be balanced by the growth of the smallest product segments - laser, robots and other electric welding equipment. Maintaining profitability is expected to be a key challenge for all manufacturers as end users continue to demand higher efficiency and more value-added products at lower prices. 'It is vital that measures are taken to enhance productivity and performance in order to maintain financial stability and remain competitive on a global scale. Manufacturers must also address the growing demand for complete and customised solutions that are likely to drive the market in coming years,' concludes Mr. Sabiers. Title: Metallic Welding Equipment and Consumables Market: Shipbuilding and Offshore Applications Code: B198
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