04-Aug-2004 - Frost & Sullivan

Demand For High Performance Equipment Sustains Growth In Mature Industrial Weighing Machinery Markets

London, 02nd August 2004....Even as the increasingly mature European industrial weighing equipment market struggles with competitive pressures, untapped end-user sectors and emerging opportunities in Eastern Europe are poised to create new revenue streams. At the same time, higher productivity needs across a range of key industrial sectors are expected to boost demand for advanced weighing machinery.

In 2003, the total European industrial weighing machinery market was estimated at $1.06 billion, having fallen from $1.11 billion in 2000. This decline was attributed to the general economic slowdown, the shift of manufacturing activities to China and other low-cost regions and overall price pressures.

From 2004, the market is expected to stage a recovery with overall revenues forecast to reach $1.27 billion in 2010. The focus during this period is likely to be on offering improved weighing equipment at ever more competitive prices.

The push by end-user companies for more productive and cost-effective processes is expected to generate demand for faster and more accurate weighing systems. This is likely to create opportunities for weighing machinery manufacturers that can supply leading-edge solutions.

"End-users in the pharmaceuticals and food and beverage industries expect more accurate, higher precision, faster weighing solutions, reliable user-friendly software and other product enhancements," states a new study by Frost & Sullivan (http://www.frost.com).

"These act as drivers for the equipment manufacturers by either replacing older equipment or selling new products to the end-users. Investment in more advanced technology benefits revenues in that advanced machinery is generally higher priced, positively influencing revenue growth."

At an estimated $373.0 million, the food, dairy and beverage end-user sector contributed more than a third of the industrial weighing machinery markets revenues in 2003. The requirement for greater control and accuracy in weighing solutions, stricter regulations and the trend towards packaging of fresh foods are all set to sustain above average growth rates in this sector, with its revenue share projected to increase to 36.0 per cent in 2010.

However, as revenues stagnate in several other well-established end-user sectors, weighing equipment manufacturers have been compelled to explore new markets. Of these, waste management, recycling and environmental sectors are expected to rank amongst the fastest growing segments.

The need for more accurate weighing solutions is anticipated to support future growth in the large Western European markets of Germany, France, the United Kingdom and Italy. At more than twice the size of second placed France, Germany is forecast to remain the largest market.

The fastest growth is project, however, to be registered in Eastern Europe. Lower market maturity, demand for advanced technologies and migration of production facilities eastwards are set to push growth rates to a level significantly above the overall European average, with Poland, the Czech Republic and Hungary leading the way.

In product terms, the largest individual segment in 2003 was balances and scales, which accounted for an estimated 38.4 per cent of total market revenues. Widespread use across multiple application sectors, along with high demand from the industrial, the food, dairy and beverage and the chemical sectors is expected to help this product category maintain its dominance over the long term.

With over three hundred participants in the market, competitive pressures are expected to remain high. Critical differentiating factors are expected to be price, technical expertise, service and reputation. In particular, market advantage is expected to derive from cost competitiveness and leadership in customer service.

"As business increasingly becomes focused on building closer relationships, service will become a key means of differentiation," the study concludes. "Moreover, by emphasising competitive prices, manufacturers are able to meet the rising customer demand for ever more advanced and competitive technology."

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