Suppliers under pressure to maintain prices
Pump manufacturers are seeing a trend for less expensive and more standard construction-type pumps (non-engineered). This can be attributed to the fact that they are less expensive and are less costly to install.
By Agatha Ciancarelli -- Purchasing, 4/8/1999 2:00:00 AM
Pump manufacturers are under pressure to maintain current price levels. While one producer reports an attempt to slightly increase prices, pump buyers can count on fairly stable price levels for the rest of the year.
Says Joe Strahler, sales manager with Magnatex Pumps, "Mergers, acquisitions, and alliances are making the market more competitive. I have not seen any significant price change in our market for quite a while and do not predict any changes."
Tim Caldwell, marketing coordinator with Versa-matic Pumps, agrees that certain companies are becoming more powerful due to mergers. He says, "Companies that used to be private are now being bought out and are becoming more powerful. Companies have not been folding due to the competition, but some cannot keep competing and have had to stop manufacturing certain products."
Caldwell says, "We have implemented a general annual increase of 2% to keep up with manufacturing costs."
Plateau in demand
Pump manufacturers agree that demand is starting to plateau. Says Caldwell, "We are reaching a maturing stage." Strahler agrees: "Although business started strong in the beginning of 1998, it has slowed considerably since the fourth quarter."
Demand is expected to remain flat in 1999. Caldwell says that there is growth potential globally but, "the U.S. market is more flooded."
The slowdown in demand is attributed mostly to Asia's economic crisis. "The crisis in Asia has affected demand with new plants as well as existing plants," says Strahler. "A lot of pumps were sold to Asia, and since the Asia/Pacific financial situation began, there has been a slowdown."
Supply is plentiful and manufacturers do not see the situation changing this year. Says Caldwell, "We are not having any problems with supply." Strahler agrees: "I think all pump manufacturers have ample supply and the capacity they need. This should continue for the remainder of 1999."
Leadtimes also remain competitive. They are running at standard levels, with no signs of extending. Says Strahler, "If anything, manufacturers are able to produce in shorter and shorter time frames, in terms of standard materials. Leadtimes are considered very good, running from in-stock items to four-week delivery."
Added services and products
Pump manufacturers are seeing a trend for less expensive and more standard construction-type pumps (non-engineered). Strahler attributes this to the fact that they are less expensive and are less costly to install.
To make products more attractive to customers, manufacturers provide extended warranties and continue to try to improve service and customer support.
Training is one of the areas in which manufacturers are extending their service. Says Caldwell, "Versa-matic Pump provides training to distributors and customers of our products."
Market at a glance
Demand: Expected to stay flat in 1999, or experience a mild increase.
Supply: Ample supply and capacity.
Prices: Basically flat. At least one producer has attempted a slight increase.
Leadtimes: Standard, up to four to five weeks.
World pump growth(million U.S. dollars)
% Annual Growth
Item 1997 2002 2007 '97/'02 '02/'97
Demand 26445 37550 52500 7.1% 7.3%
U.S. 3960 5200 6700 6.0% 5.6%
Canada & Mexico 1280 1800 2500 9.2% 7.1%
China 3000 4850 7300 14.1% 10.1%
Japan 1330 1750 2375 5.9% 5.6%
Other Asia/Pacific 3595 5200 7800 10.0% 7.7%
SOURCE: FREEDONIA GROUP
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