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Energy costs drive Europe`s higher take-up of VSDs

01 March, 2005

Europeans buy proportionately more variable speed drives than Americans because of the higher cost of energy and a greater awareness of conservation, a new report suggests. The study, by the market analyst IMS Research, says that the ratio of the number AC drives sold to the number of motors sold is 58% higher in the EMEA (Europe, Middle East and Africa) region than it is in the Americas. If American buyers bought the same proportion of VSDs to motors as their European counterparts, they would generate VSD sales worth $1.9bn.

IMS estimates that the global market for low-voltage drives grew by 10.5% last year to reach $5.17bn, with much of the growth coming from China. "With the Chinese economy devouring 50% of the world`s cement, a third of its steel, a fifth of its aluminium, and almost a quarter of its copper, it helped to lift industry sectors and economies around the globe," says Steve Odom, an IMS analyst.

But, he adds that Chinese demand is likely to drop off in future because of higher interest rates and property prices in China, and because of a possible upward revaluation of the Yuan.

The key growth for VSD sales will, in future, come from rising energy prices and from falling drive prices, IMS suggests. Much of the growth will come from small, non-industrial applications such as motorised advertising displays and car washes, it adds.

As a result, IMS forecasts that revenues from the smallest, simplest drives will show a compound annual growth rate of 6.5% over the coming five years. Sales of high-performance drives will grow more modestly at around 3.6%, even though this was the fastest-growing segment of the drives market in 2004.

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