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Emerald Group Publishing Limited
Copyright © 2002, MCB UP Limited
Hard times ahead for weighing systems forces companies to focus on innovative solutions
Keywords: Weighing, Markets
New research from industry analysts Frost & Sullivan shows a drive for efficiency and product development is continuing to keep the industrial weighing machinery market moving forward in otherwise difficult times for the industry.
The European market is close to maturity, and overall developments on an annual basis indicate slow rather than rapid growth. In such a mature industry sector, it is imperative for manufacturers to respond to the challenges by developing innovative solutions. Overall, growth has been fairly static in recent years with Frost & Sullivan valuing the market at $1.09 billion in 2000, an increase of 2.9 per cent on the previous year.
The market is faced by a series of competitive issues. Price has always been a strong factor, and fierce competition between suppliers resulted in price reductions across the market as a whole. Profit margins were negatively affected. However, product developments, especially technical advancements, in the European market are continuously undertaken as the user base demands equipment that is more precise and efficient.
The aim is to enhance performance, accuracy, speed and capacity, and investment in more advanced technology should benefit revenues as this advanced machinery is generally higher priced, positively influencing the advance of the total market.
The study also found the trend towards greater efficiency has been increasing noticeably in recent years. Costs in production lines can be reduced by deploying more efficient and accurate weighing machinery. The savings achieved by the deployment of such weighing machinery also shortens the payback period of the investment.
End-users are generally prepared to pay a higher initial cost for this more advanced weighing equipment, provided they can be convinced of the long-term benefits. It is key for manufacturers to continue to expand customer awareness of new and improved machinery currently available or soon to be released.
The European industrial weighing machinery market is served by a significant total of manufacturers. The leading competitor in the market was Mettler Toledo which has seen an advance in share to 14.2 per cent. In second was Carl Schenck with 10.6 per cent. The study also found the competitive structure has changed with a number of fresh mergers and acquisitions increasing the level of market concentration. Companies which merged or were acquired by others often gained new potential and followed different strategies to increase their market share. For example, Societa Cooperativa Bilanciai's (SCB) market share increased significantly in 2000, placing the company fourth in Europe. SCB occupies the largest share of the Italian market and has gained share by acquiring other market participants in different European countries. SCB is also anticipated to become more influential and gain in market share, primarily owing to its strategy of acquisitions.
Other significant rivals include Precia Molen, Avery Berkel, K-Tron and the Thermocentron group. Excluding Precia Molen, the market shares of these companies lie below five per cent of the total market. Avery Berkel's prospect to gain a larger share of the market, especially of the UK market, greatly increased because of the enlarged commercial opportunities of the combined companies, Avery Berkel and Salter Weigh- Tronix. K-Tron is expected to gain a distinct competitive advantage via technological innovation towards the end of 2001. Thermocentron has acquired a number of manufacturers and is gradually attaining a more significant share of the European market. The study suggests greater connectivity is the next step forward. Connectivity opens a new dimension for the utilisation of weighing machinery. It transforms the weighing machine into a new tool not on lyable to solve weighing tasks but to act as an aid for production processes, the report says. The need for connectivity has always existed but customers are not prepared to pay the high price for the few low connectivity products available at present. Leading competitors are currently developing high connectivity products, which are expected to be launched within three to five years. Frost &Sullivan believes manufacturers that fail to enhance their product coverage to include high end high connectivity products will be forced into increasingly relying on sales of low value products, limiting their own growth potential.
The study divided the market into six different product types. The largest share of total revenues was occupied by balances and scales at 38.1 per cent in 2000. The revenue share of this market segment is estimated to increase continuously until the end of the forecast period (2007). Fairly strong demand for high precision balances, and the on-going trend to measure raw materials ever more accurately should support this increase.
Revenue share for the continuous weigh feeders market is also expected to develop more positively, and is forecast to rise slightly from 11.4 per cent in 2000 to 11.6 per cent in 2007. The food and chemical industries are the most important industries for this market segment and are expected to continue to see sustained demand.
The belt scales sector is expected to continue to suffer from the decline of the mining industry. Revenue share is forecast to fall from 7.6 per cent to 7.3 per cent between 2000 and 2007. The revenue share of transport scales is also estimated to decline. Other product types studied in the report are checkweighers, and bulk and batch weigh feeders.
Report Code: 3968, Publication Date: October 2001, Price: 5000 Euros Frost & Sullivan; http://www.frost.com