The global market for medium voltage (MV) motors experienced a significant contraction in 2010, declining by more than 20% in revenue terms from pre-recession levels. However, in 2011, developing economies are leading the recovery in this estimated $4.1 billion market. According to the 2011 Medium Voltage Motors study, recently published by IMS Research, developing economies are expected to outperform the global market through 2015, when it is estimated that the market will top $5.7 billion.
Emerging economies, such as those in China, India, and Brazil, usually have low-cost labor forces, indigenous sourcing of raw materials, and rapid growth in industry sectors that use MV motors, like metals, mining, and oil & gas. A combination of these factors is expected to generate double-digit revenue growth during the forecast period. In contrast, the established economies of North America and Western Europe, where MV motor revenues contracted by an estimated 30% in 2010, face a longer recovery period, with only modest single-digit growth forecast to 2015. The market's recovery to pre-downturn levels is not expected until 2013 at the earliest.
According to senior research analyst Mark Meza, "Developing countries with highly favorable conditions were able to continue growing their domestic MV motor markets during the global recession, while developed economies struggled mightily. In addition, MV motor suppliers in these regions have been concurrently gaining share in Western countries due to growing exports as a result of a notable increase in quality of their products." In the last two years, Asian motor manufacturers in particular have been able to capitalize on increased price sensitivity in heavy industries that use MV motors. This has been evidenced by a significant drop in average selling prices (ASPs) in the OEM space, which has experienced an influx of lower priced MV motors that well established manufacturers have not been able to match.
Replacement of MV motors made by American and European powerhouses with low-cost motors produced in other regions of the world has made these companies take notice. Meza adds, "The entrenched suppliers have certainly taken notice of an estimated $480 million worth of MV motors sold by suppliers from developing nations in 2010. This has been especially true in markets where 'off the shelf,' non-specialized MV motors can be sold in large volumes at low cost." It is expected that once the global economy begins to regain momentum, the leading European and American manufacturers will again be able to leverage the value propositions of durability, reliability and support and service after the sale that have traditionally driven sales of their MV motors.