Abstract
Intense Price Competition Prompts Cost-optimization Efforts
Price wars have been forced on the hydraulic cylinders and accessories market
due to the presence of a large number of manufacturers, increasing influx of
foreign companies, and availability of alternative technologies. Besides, drying
up of demand has caused lesser funds to be allotted for research and development
activities. The small- and medium-sized enterprises (SMEs) are the hardest hit,
especially with regard to market penetration. To offset the strain on prices due
to ever-increasing material and labor costs, manufacturers have started
operating efficiently and reducing overheads. The need to make profits could
also force upgrades of plants.
This Frost & Sullivan research examines the North American hydraulic
cylinders and accessories markets. It offers revenue forecasts by market segment
and covers key drivers and restraints affecting market growth. It also provides
strategic recommendations to overcome market challenges. Revenue forecasts of
various geographical regions by both product and application type are provided.
Availability of Cheaper Foreign Goods Compel Shifting of Production to
Low-costing Countries
North America has become an ideal market for foreign participants with the
strengthening of the U.S. dollar coupled with currency devaluations and market
decline in some Asian countries. Availability of cheap and high-quality imports
has challenged domestic manufacturers to raise the caliber of their products.
Many large companies have reacted by setting up production facilities in
low-costing countries. "New cylinders and accessories manufacturing plants
are increasingly being built outside North America because of savings in labor
costs and the existence of fewer regulations, particularly environmental,"
states the analyst.
With appropriate training in process quality control for foreign managers,
overseas facilities would be able to provide low-priced products of quality
comparable to those currently produced in the United States and Canada. The move
to establish overseas manufacturing plants will also provide exposure to new,
promising markets. "Growth in process industry infrastructure in Brazil,
China, India, Malaysia, the Pacific Rim, and Mexico is expected to continue for
decades," observes the analyst.
The Internet Changes Current Marketing and Trading Practices
Hydraulic equipment suppliers are forced to stay abreast of the latest market
developments through the electronic business media. "Many SMEs need to be
actively present on the Internet to gain international recognition, especially
with e-commerce becoming a standard trading procedure for many companies,"
notes the analyst. The SMEs that do not meet this challenge by developing web
sites displaying the company's history, structure, location, products, and
services may find themselves left out in the cold.
Such extensive web catalogs not only provide tremendous market reach but also
offer a transparent system for processing orders. Customers can trace the
delivery path of their cargo. This increases their confidence in the
manufacturers thus enhancing client-manufacturer relationships. However, many
manufacturers have still not made the shift to e-commerce since persuading
customers to rely on the Internet will be tough. They will need to overhaul
their traditional business practice to develop a market image and unique
identity on the Internet.
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