Banking woes hit low voltage drives market

Austin, Texas  –  The worldwide market for low voltage AC & DC motor drives is experiencing a greater decline than previously expected as a result of the economic downturn, according to IMS Research. Revised forecasts, it said, now indicate a contraction of 5.6% in revenues this year compared to 2008 levels.

The downward revision is based on data from the last quarter of 2008 and the first quarter of 2009, which indicate a decline in the motor drives market across all regions, said the market analysis firm. In particular, it said, machinery markets in Europe, Asia, and the Americas are performing worse than predicted, with many OEMs experiencing dramatic declines in order intake.

Meanwhile, tight lending conditions are also impacting on previously strong growth sectors such as renewable energy, added IMS. Component suppliers and wind turbine manufacturers exhibiting at the Hannover Industrial Automation Show reported significant delays on projects due to restricted lending by banks, which in turn caused problems with securing funding for large scale and very costly wind and solar farm projects. 

IMS also linked its revision to declines in regional GDP forecasts for 2009. During the fourth quarter of 2008, it noted, GDP declined by 1% in the US, and 1.5% in the EU, while Japan experienced a contraction of 3.3%. China, the only region expected to experience GDP growth in 2009, reported a 6% GDP increase for the first quarter of 2009.

According to IMS, the Chinese drives market will grow by around 5% in 2009.  This will be driven mainly by a Chinese government stimulus package, which focuses heavily on energy efficiency and many of the industry sectors that are significant users of motor drives.

On a more upbeat note,  IMS Research analyst Jenalea Howell said many suppliers of motor drives had indicated a slight increase in orders in the second quarter of 2009, and added that forecasts for 2010 to 2012 remain positive.

“Government legislation and stimulus packages will provide opportunities for suppliers to the low voltage motor drives market, which is expected to come through the recession with a small contraction and resume positive growth in 2010,” Howell  concluded.