Research finds alternative fuels, automated technologies sustaining growth
Europe’s welding equipment and consumables market is in an expansion mode thanks to steady demand from the energy sector there, and its opportunities for continued growth are strong thanks to developments in the region’s power industries, pipeline and offshore sectors in Europe. That is the finding of <>Frost & Sullivan research analyst R. Padmanabha Govindan, who follows Industrial Automation and Process Control issues.
Frost & Sullivan is a research and consulting group covering a range of industrial, technological, and consumer markets.
In the new report, Govindan writes that European demand for welding equipment and consumables will along with the number of new pipelines being laid, newer power plants planned, and a rising expectation of renewable energy sources. There are a variety of efforts in progress to reduce the region’s dependence on imported energy sources, aimed ultimately at protecting the European Union’s long-term economic and political interests.
According to the World Energy Council forecasts, by 2050 will see a global mix of at least eight different energy sources (coal, oil, gas, nuclear, hydro, biomass, wind and solar), but none of these expected to have more than a 30 percent share of the market. This, Govindan reports, indicates a widening of the growth trajectory for welding equipment and consumables in the energy sector.
In Europe’s largest economies (France Germany, Italy, Spain, and the United Kingdom), a growing number of wind turbine installations are expected to drive the welding equipment and consumables market. The EU policy spurring development of renewable energy sources will reduce dependence on imported fuel, and in the process will increase the welding activity needed to build the turbines. The sector’s equipment and consumable demand will rise in spite of the fact that several pipeline and offshore drilling projects were abandoned during recent recession, the report states.
Govindan states that the market for arc welding equipment and consumables in Europe’s energy industries should reach $3.0 billion by 2015, at a compound annual growth rate (CAGR) of 7.1 percent for the period of 2008-2015. The power industry has been providing high growth opportunities, almost recession proof, with installations of wind turbines increasing in several areas of the continent. Also, projects involving thermal boilers, hydropower projects and nuclear cells are creating significant demand for welding equipment and consumables.
The trend toward equipment automation and an increasing reliance on high-alloyed consumables for critical industries like offshore, are also contributing to the increase in revenues for suppliers of welding equipment and consumables.
Govindan points out that value of welding equipment and consumables demand is growing because of contractors’ and processors’ adoption of automated technologies and high-alloyed consumables. Automated welding systems are preferred they ensure better weld penetration, resistance to corrosive environments (as in offshore, cut down fabrication costs and repair) and better ROI. Despite the higher prices of automated welding systems than for manual ones, the researcher writes, such equipment increased its European market share during the recession.
Welding at offshore oil and liquefied natural gas (LNG) units are becoming increasingly automated owing to the lack of trained and skilled welders in those operations, as well as the increasing labor costs. Operations in energy generation, as with offshore, LNG tanks, and the pipelines must combat corrosion, and welded joints are especially susceptible. Using alloyed metals provides better resistance to environmental attack and reduces the need for repair and maintenance in pipelines and offshore. This contributes to stable revenue growth for suppliers of welding consumables.
Like the Western European economies, Eastern European countries are increasing their investments in the energy sector, notably in renewable energy projects, which are driving the market for welding equipment and consumables there. In the past few years, the region has been the target of financial support and aid from multi-lateral organizations like the European Investment Bank, the European Bank for Reconstruction and Development, and the World Bank.
In addition, green certification supports from different governments have favored the energy market, thus driving demand for welding equipment and consumables. For example, Govindan cites the Polish government’s support for solar power: It provides 45-percent subsidies to such projects, and the market is expected to see high installations by 2013. Estonia and Romania are forecast for high numbers of wind turbine installations, and Bulgaria is expected to emphasize solar energy projects. As a matter of fact, Govindan points out that Eastern Europe has a higher growth potential over all than Western Europe, as most of the welding is not automated in this region.
The study concludes that Europe’s high level of investment in renewable energy projects is benefiting the welding equipment and consumables market, and gradually shifting its decisive factors price to quality and technology.