Adrian has been conducting research on, and managing teams of analysts covering, the technology industry for over 20 years. He has pioneered many data analysis techniques and methods that are used widely by analysts today, as well as having created frameworks for measuring numerous technology markets from industrial automation products to semiconductors.
Our recently published LV motor drive research comprises unprecedented country-level detail. To showcase this capability, we decided to examine the market for LV drives within this year’s Hannover Messe partner country – Sweden.
(Note: all visuals are exported directly from our LV Motor Drive Power BI dashboard and all data is sourced from Interact Analysis).
The Swedish market for low voltage AC drives (LVACD), excluding the value of servo/stepper drives, was worth around $90M USD in 2018 in fixed dollar terms1. Demand for drives is driven primarily by a stable manufacturing economy in the region, that continues to grow over time, albeit at relatively slow CAGR of 1.7% since 2013. Sweden accounted for 2.1% of manufacturing output in Europe in 2018, but a slightly larger percentage (2.3%) of the European drives market, reflecting that the region’s higher drive to motor attachment rate compared with many of its peers.
At Interact Analysis, we segment the LVACD market by the form factor of the drive, as it helps to characterize an important dynamic we’re seeing – a move towards decentralized architectures at the expense of cabinet mounted drives. The Swedish market is representative of the European market in general in this regard, where cabinet mounted drives account for the lion’s share of revenues. In general, we see cabinet mounted products being slowly eroded by a move to decentralized, motor mounted and wall mounted products – all types that can be implemented in a decentralized system architecture. This trend is taking place slowly, however, as can be seen by our forecast, cabinet mounted drives will continue to be the largest segment of the Swedish market in 2022.
Our growth forecast, as shown in the figure below, also highlights that in 2018 the market pulled back slightly from a strong performance in 2017. Following an unusually high growth year for the LVACD drives market, during which the Swedish market enjoyed growth of 11.4%, the market experienced a contraction of 2.2% in 2018. In general, we’re seeing a slowdown of the European manufacturing economy, which manifested particularly in the second half of 2018, and is the precursor to a broader slowdown of the global manufacturing economy (discussed here). Not all European drives markets experienced a decline in 2018, but most did. In general, this negative market growth was linked to machinery markets contracting. For example, Sweden’s machinery market pulled back by 1.6% during 2018. In general, machinery markets tend to turn negative when the broader manufacturing economy is exhibiting signs of a slowdown.
We’re anticipating another underperforming year in 2019, with a market decline of 3.1% forecast for the year. This is a continuation of the poor economic conditions affecting market growth. Overall, the impact is fairly small as we do not expect the global manufacturing slowdown to be too deep, hence a recovery is expected during 2020 to 2021.
Demand for LVACD from Swedish Machinery Markets
Machinery markets account for the largest share of drives demand, as opposed to that driven by end-user industries (i.e. where the drives ultimately end up being used). In Sweden, we estimate machinery markets account for around two-thirds of drive demand in the region, which is a slightly higher ratio than for Europe in general (~60%). This makes the drives market in the region more susceptible to the highs and lows of machinery production.
The figure below shows the machinery portion of the Swedish LVACD market broken out into its main machinery segments.
There are several notably larger sectors for LVACD in the region. HVAC&R machinery is the largest; which is not surprising as we see this sector as the single largest for the global LVACD market. Relative to other regions, Sweden’s HVAC&R machinery segment is proportionately lower, but important none-the-less. Pulp & paper machinery is also a strong market for LVACD – Sweden is one of the world’s largest producers of this machinery, due to its robust wood and paper industry. The “other multi-industry machinery” category is also a large market, comprising equipment such as centrifuges, dish washing machines, air/gas liquefying machines, pipe cleaning machinery, industrial robots, and machine tools used for working non-metals such as wood, cork, bone, hard rubber and hard plastics.
Interact Analysis will have a team of analysts attending Hannover Messe this year. If you would like to schedule a meeting to learn more about our LV motor drive research, or market intelligence capabilities more broadly, please contact us here.
1 Note: we calculate growth rates in “fixed USD terms” by using an average currency rate for last 11 years to calculate historic and forecast market sizes. This method eliminates the impact of forex changes on market sizes.