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American drives market is bouncing back

01 September, 2002

After suffering a double-digit collapse in 2001, the North American AC drives market has resumed growth during 2002, according to a new market analysis by the California-based Drives Research Corporation.

The company is predicting a 2.2% growth for AC drives in North America this year, followed by 5.4% in 2003 as the US economic recovery gains momentum. Although North America`s end-user markets are still growing slowly, the company points out that that manufacturing, which accounts for 62% of AC drives sales in North America, has recorded eight months of continuous growth, following 20 months of decline.

And, while surveys show that manufacturing executives are still reluctant to invest in production-enhancing capacity, they also reveal that most are ready to invest in cost-saving and productivity-enhancing equipment - areas where AC drives are finding significant applications.

"Combined with emerging new applications, we expect the billion-dollar-plus North American AC drives market to post a 5.9% CAGR (compound annual growth rate) over the next five years," says Thomas Kaporch, Drives Research president and principal author of the 692-page report*.

"This compares favourably to the 9.6% CAGR achieved from 1991 to 2000, when effects such as higher saturation rates in traditional end-markets and applications are taken into account" says Kaporch. "Overall, we see the end-markets for AC drives growing at nearly 4% annually from 2003 through to 2006 - almost the same as the CAGR of 4.1% they posted from 1995 to 2000," Kaporch adds.

"Growth in North America will be driven by the need for energy conservation, higher productivity, flexible production, precise motion control, emerging applications, and increased investment in neglected infrastructure needs," Kaporch suggests. "It will be led by the process industries, transportation and utilities market segments, with material-handling, refrigeration, building HVAC, process and packaging machinery applications also showing significant improvements.

"Industrial manufacturing growth in the US will lag slightly," he says, but this will be offset by emerging applications such as household and commercial appliances, hybrid electric vehicles, marine propulsion and non-automotive traction applications.

The study notes that while some of North America`s largest AC drive suppliers suffered the largest sales decreases in 2001, several suppliers using focused, application-specific marketing strategies managed to boost their sales.

"Price erosion, consolidation, globalisation and continuing technology development will continue to impact the industry," Kaporch predicts. "Even as integrated power electronics packaging, HVICs, and dedicated logic IC motor control solutions continue to lower the barriers to entry in the fragmented industry, advanced control schemes, advanced DSP and RISC-based microcontroller solutions, new circuit topologies and advanced power semiconductors will enable sophisticated manufacturers to deliver unprecedented value differentiation to users."

With more than 95 drives brands currently serving the North American market, Kaporch expects suppliers to intensify their efforts to differentiate their products on the basis of initial, lifecycle and total system costs, as well as offering system integration services, and promoting systems optimised for specific applications.

The study identifies application-specific designs, increased intelligence, advanced sensorless control, environment-friendly converter topologies, and plug-and-play designs, as key trends that will affect the design of AC drives in the near future.

"In the longer run," Kaporch notes, "bidirectional and high-temperature silicon-carbide power semiconductors, matrix converter topologies, and neural/fuzzy logic-based control schemes promise to revolutionise the industry, propelling it to a new level of explosive growth."

* The market research and technology forecast report is called AC Drives Outlook for North America 2002-2006. Details from Drives Research.




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