Gears & Motors : Industry scenario & future

Industry experts claim that gears and motors sector in industry is highly competitive with very low margins, mechanical power transmission components market pose a challenging environment for growth. Despite being traditional solutions, gear boxes and gear motors provide advantages such as familiarity, reasonable life, high reliability, reasonable cost and universally serve most of the requirements of the industrial automation sector globally.

Speed adjustment techniques have been employed to transmit mechanical power to power machineries ever since their advent in industries. Mechanical speed changer governed the market before the arrival of electric motors controllers for industrial power transmission. Presently, mechanical, electrical and hydraulic drives cater to this requirement, each delineating its pros and cons, necessitating a thorough analysis before narrowing down to one particular solution for any type of application.

Customers in aerospace, automotive and manufacturing and process industries are offered a broad spectrum of mechanical power systems and component that include chain and belt drives, gear reducers (such as helical gear, worm gear, planetary gear), gear motors and so on to suit their application needs.

The belt and chain drives market is mature and well established with the OEMs and more focused on enhancing the design and performance of the products. Mechanical drives such as chain drives are popular due to their ability to transmit high torque levels in a smaller form factor, but besides being economical for such applications, their maintenance cost is substantial.

This includes cost towards lubrication, alignment and regular replacements due to wear and tear, hence requiring proper maintenance for continued optimal performance. As a result, the after sales support is observed to be of great importance in this market, as the customers demand best support from the vendor they purchase the mechanical components from. Additionally the market for these components is heavily dependent on strong customer-manufacturer relationships and satisfactory customer service is an important factor behind maintaining and acquiring market share.

The simplicity of the design has allowed widespread acceptance of the gears technology. It is perceived to be the most cost-effective technology for industrial mechanical power transmission. Modular design and flexibility in usage boost the cost effectiveness of the geared products.

Its widespread acceptance has generated a massive customer base for gearbox and gear motors and this, in turn, is expected to improve the growth statistics of the industry. But today, the gears, gearboxes, geared motors and other mechanical power transmission equipment pose a challenging environment with low profit margins. Experiencing high competition with increasing number of market participants, threat from alternate advanced electrical power transmission technologies and reduced potency to penetrate newer application platforms has threatened their continued usage for numerous applications.

Renewable energies are expected to bolster the demand :
A shift towards more efficient gearbox and gear motor designs is expected to have a positive impact on revenue growth of gearbox and gear motors segment. The increasing demand for planetary solutions for better torque and precise process control is expected to enhance the revenue contribution, as these products are comparatively high priced for the benefits they deliver.

Major market trends include incorporating advanced gear designs, improving product quality, decreasing product lead times, enhanced services offered and product differentiation for specific applications.

The future prospect of this industry is strongly correlated to the economic activity in the country, especially in core sectors like power, infrastructure, mining, oil and so on. The growing demand of power is expected to pave way for newer power projects and henceforth, increase the usage of geared components. The shift towards renewable resources of energy such as wind and solar is also expected to bolster the demand for geared components, as gearbox and gear motors form the vital components in construction of these renewable power generation units.

It is essential that appropriate pricing of the product is done with appreciable features to attract end-user attention. To sustain the competition it is important to manage cost associated with production and offer lower prices. Cost advantage can be achieved by outsourcing the production of non-critical components to a low-cost manufacturer in regions, where labour and raw material are available at reduced prices. The final component can then be inspected and assembled by more skilled labour.

Forecast :
Shipments of precision geared products (gearboxes and geared motors with backlash ratings of less than 20 arc-minutes) were nearly 80 percent higher in 2012 compared to 2009 levels. Shipments of precision geared products (gearboxes and geared motors with backlash ratings of less than 20 arcminutes) were nearly 80 percent higher in 2012 compared to 2009 levels.

However, uncertainty about the Eurozone economy and China’s decelerating economic growth are the leading factors in the more than one percent decline expected in precision geared product shipments in 2013. IMS Research, now part of IHS Inc., projects the market for precision geared products to reach an estimated value of nearly $1.7 billion with over 1.8 million units shipped in 2013.

High precision gears are often rated according to their ability to live up to measurements in arcminutes, what then is an arcminute? An arcminute, in divisions of the circle or angular measures, a minute is equal to sixty seconds, or one sixtieth part of a degree. Precision gearbox shipments, which accounted for more than 95 percent of the precision geared products market in 2012, increased by more than 70 percent from 2009 levels due to pent-up demand for servo-driven machinery and increased access to capital. A significant amount of investments were made in the automotive industry, where demand for industrial robots used in the production of vehicles spurred a sharp increase in precision planetary gearbox shipments. Precision planetary gearboxes accounted for more than 82 percent of precision geared products shipped in 2011. Investment in new automobile manufacturing facilities is expected to continue, however at lower rates than those seen in 2010 and 2011. Sales of electric industrial robots to the automobile industry have slowed considerably in 2012 due to lower of demand for Japanese products from China and continuing weakness in the Eurozone economy.

Precision gearbox and geared motor shipments into industry sectors such as materials handling, woodworking and printing are also expected to grow at a slower pace in 2013 following the fulfilment of pent-up demand that resulted from the 2009 recession. Although precision geared product shipments to the food, beverage and tobacco industries are expected to decline in 2013, positive signs of economic growth in the Eurozone and China could mean further growth of precision geared product sales from 2014 to 2016.

Precision geared product sales to the robotics and machine tools industries, which accounted for approximately 39 percent of all precision geared products shipped this year, are forecast to grow at a mere 3.5 percent in 2013. However, the slowdown in these industry sectors is not projected to cause the total market for precision geared products to decline through 2016.

Global Forecast :
Gears and motors are very vital for not only automotive engineering but for almost all types of manufacturing activity. Therefore the views of an engineering giant point towards future in no uncertain terms. The GE CEO Jeffrey Immelt explains the trends in general, by saying that they have globalized around markets—not cheap labour. The era of globalization around cheap labour is over. Today GE goes to Brazil. It also goes to China. And it even goes to India, because that’s where the customers are. Global demand for gears and gear assemblies is forecast to climb 4.7 percent annually through 2013 to $169.5 billion according to the Freedonia group. Market gains will be driven by rising motor vehicle production, ongoing economic growth, increased manufacturing output and a shift in the product mix toward more expensive, energy efficient units such as seven- and 8-speed automatic transmissions. Strong demand in relatively small but fast-growing markets like wind and solar energy will also contribute to gear sales advances. Demand in developing parts of Asia, Eastern Europe, the Africa/Mideast region and Central and South America will outpace product sales in the United States, Western Europe and Japan.

Market gains in the developing world will be fuelled by healthy economic growth, continuing industrialization efforts and climbing personal income levels, resulting in higher motor vehicle and other manufacturing output. In addition, rising standards of living will help stimulate demand for motorcycles and other gear- containing durable goods, boosting both original equipment manufacturing and aftermarket gear sales. China and India will register some of the strongest market advances. China is expected to account for one-third of all additional gear demand through 2013 and will surpass Japan to become the second-largest national market behind the United States By 2018, total gear sales in China will exceed product demand in the United States. Market growth is also expected to be healthy in Indonesia, Thailand, Iran and Russia. Although advances will be less robust than in developing countries, gear product demand in the United States and Western Europe will increase as well spurred by renewed strength in motor vehicle output following a period of decline.

Gear sales in Japan even prior to the recent tragic events there are predicted to slow noticeably, also negatively affected by a drop in automotive industry production and continued sluggishness in capital equipment markets. Also prior to the disaster, Japan anticipated a more favourable outlook for machinery manufacturing to provide some impetus to growth, along with the large numbers of gear-containing equipment in use that would help support aftermarket gear demand. Only time will tell how that is resolved. The global market for gears and gear assemblies is heavily reliant on the motor vehicle industry. In 2008, seven-tenths of all product sales were automotive related, with motor vehicle transmissions alone accounting for 45 percent of the entire gear market.

Transmission demand will also grow at a faster rate than accessory, driveline, steering and other motor vehicle gear sales through 2013, bolstered by an upturn in industry output in the United States, where more costly automatic transmissions are used in the vast majority of vehicles.