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Europe`s motor users `are not satisfied`
Published:  01 January, 2003

Europe`s motor users are not happy with the service they are getting from their suppliers, a survey has revealed. Their complaints include uncompetitive pricing, deficient services, insufficient technical knowledge, and lengthy lead times, according to the study carried out by the market analyst Frost & Sullivan.

The survey*, of more than 100 engineers, purchasing managers, plant managers and managing directors in companies that buy and use integral horsepower motors, reveals that almost a third of them regard quality as the most important factor when choosing a motor supplier. For another 26.5% of respondents, pricing was the primary consideration, especially for applications in the process sector and in the pump, valve and compressor markets.

Although ABB and Siemens - the market leader - score top marks in terms of market presence and customer perception, Frost & Sullivan attributes this largely to their strengths in key regional markets. ABB performed well in terms of quality, price, reputation and delivery time, but Siemens` differential pricing policy came in for criticism from some of its customers.

"Respondents` frustration over Siemens` poorer performance in terms of pricing and delivery times is not mitigated by the relatively high quality of Siemens` products and this could create problems for the company in maintaining market share, despite its leading standing for quality and its market penetration," F&S comments.

It points out that Siemens may be vulnerable to lower-priced competitors, most notably the Brazilian motor-maker WEG which outranked Siemens both in terms of customer service and price. Although WEG currently accounts for less than 5% of the European market, it has the potential to boost its market share significantly "and to encroach on the established players` turf," says F&S.

The analyst suggests that Siemens will have to "re-appraise its use of the price/value equation and reduce the premium associated with its brand name" if it is to achieve price satisfaction and increased loyalty.

F&S research manager Mik Sabiers advises WEG to focus on improving customer perception of its product quality and technical knowledge, and to build a market reputation. "A system of customer referrals, in which satisfied clients are rewarded for recommending WEG to others, may achieve this aim at a relatively low cost," he suggests.

In the survey, Brook Crompton performed poorly on measures such as customer service, technical knowledge and lead times, "indicating that competitors have the potential to seize market share in the UK," where Brook holds "the leading, but weakening position", says F&S. The research shows that Brook Crompton`s established customer base "is vulnerable to well-informed competitors", it adds.

French customers gave Leroy-Somer a higher rating than its customers elsewhere in Europe. Although the company achieved high satisfaction scores in its home market on measures including price, quality and reputation, Frost & Sullivan suggests that Leroy-Somer needs to raise its service levels further. It also says that the company would benefit from improving its customer relationships in some markets outside France.

The European integral horsepower motors market is characterised by frequent, low-volume, low-value purchases. More than two-thirds of the motors bought by the F&S sample are rated at less than 7.5kW, with 80% of them being AC machines, and 84% being for low-voltage operation. Among end-users, 84.4% of the motors bought are replacements for existing machines.

Of those surveyed, 60% purchase their motors directly from the manufacturers, with the remaining 40% buying from distributors.

Frost & Sullivan predicts that the increasing penetration of the market by low-cost global suppliers will put extra pressure on prices, especially in the important HVAC, pump, and compressor markets. But it notes that "while a low price is a necessary condition for customers to purchase a particular motor, competitive pricing alone is not sufficient to motivate the purchase".

According to F&S, "many customers choose a pool of low-priced motor suppliers and then differentiate between them on the basis of product quality and delivery time".

The Frost & Sullivan survey is not all bad news for motor suppliers. Despite the uncertain economic climate, 28.1% of those surveyed expect to spend more on motors this year than last, with only 16.8% predicting that will spend less in 2003 than in 2002.

* Integral horsepower motors markets in Europe - an end-user survey (Report B014). Price €6,500. Details from Frost & Sullivan.

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