While old and outdated equipment is undermining the competitiveness of the Russian and Ukrainian manufacturing sectors, at the same time it is creating considerable opportunity for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
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"Although production companies realize they are using outdated equipment, many of them do not have the budget required to renew their production facilities.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
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
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