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Opportunities for electric motor markets in Russia, Ukraine

RP news wires, Noria Corporation

While old and outdated equipment is undermining the competitiveness of the Russian and Ukrainian manufacturing sectors, at the same time it is creating considerable opportunity for replacement sales. However, with only a few companies capable of investing in new equipment, Russian and Ukrainian electric motors suppliers may be forced to consider extending their product portfolios, as a route to supporting market share while better responding to customer needs.

Frost & Sullivan (http://www.motors.frost.com) estimates that revenues in the Russian electric motors market will rise to US$1,456.2 million in 2012, while the Ukrainian electric motors market will expand to US$287.8 million over the same period.

"A substantial number of Russian and Ukrainian manufacturing companies are currently working with equipment that, in Western Europe or North America, would be considered obsolete," said Frost & Sullivan Research Manager Richard Tamworth. "As a result, most suppliers of electric motors to the Russian and Ukrainian markets expect the replacement cycle to intensify in the next few years, as many companies face the problem of not being able to operate if they do not buy new manufacturing systems or at the very least, new motors to drive their old ones."

However, despite both the optimism of suppliers and a broader industry recognition that relatively obsolete equipment is hampering their competitiveness in the global markets, only a few Russian and Ukrainian manufacturers, for example those connected to the oil trade, actually possess the resources to invest in the modernization of their production facilities. Many companies lack the capital to update their facilities as their sales are low, their production capacities are often severely underutilized and their margins poor.

"Although production companies realize they are using outdated equipment, many of them do not have the budget required to renew their production facilities. This lack of investment may prove to be one of the biggest setbacks for the Russian and Ukrainian motors markets, and perhaps their economies in general," said Tamworth. "Despite the gradual, if inconsistent improvement in the economic situation in these countries, many manufacturers are still obliged to repair existing equipment and motors and plan to buy new ones only when necessary."

The inability or unwillingness of manufacturers to invest in new equipment has a number of more strategic ramifications. The overall quality or technology requirements of the Russian and Ukrainian markets are, typically, relatively low. Inevitably, companies with limited financial resources tend to focus on the basic configuration of electric motors.

"As a generic marketing strategy, Russian and Ukrainian electric motor suppliers should therefore consider offering comprehensive product portfolios where a customer has several component options, mixing ultra-low cost basics, with more advanced, perhaps imported options," said Tamworth. "This will allow them to better accommodate widely varying customer needs and secure significant competitive advantage."

If you are interested in a virtual brochure, which provides manufacturers, end-users and other industry participants with an overview of the latest analysis of the Emerging Opportunities in the Russian and Ukrainian Electric Motors Markets, e-mail chiara.carella@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country. We will send you the information via email upon receipt of the above information.

Emerging Opportunities in the Russian and Ukrainian Electric Motors Markets is part of the Power Transmission Subscription, which also includes research in the following markets: Germany, United Kingdom, France, Italy and Western Europe. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews are available to the press.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities.

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