North American Hydraulic Pumps Markets

Abstract

North American Manufacturers Gear up to Face Competition from Cheaper Imports

Escalating imports of low-cost, low-specification pumps from Asia and East Europe have made price a significant competitive factor in the North American hydraulic pumps market. Imports of the more sophisticated vane, piston, and vacuum pumps that directly compete with a sizable part of the North American market are also on the rise. Additionally, some North American participants are reducing production levels and sourcing components and even complete systems from these low-cost manufacturers. The major market participants have responded proactively to this challenge by expanding product range and acquiring smaller companies. Manufacturers will have to provide substantial value addition through enhanced service and support as well as technological improvements, or risk losing market share.

This Frost & Sullivan research analyzes the key factors impacting the North American hydraulic pumps market and provides in-depth revenue forecasts by product, application, geographic, and end-user segments. The study of end-user segments includes aerospace, industrial and mobile application markets. This research benefits manufacturers and distributors by helping them assess technological developments by competitors, growth potential of individual product types and end-user segments, and the relative importance of application markets.

Recent Spate of Mergers and Acquisitions Creates Challenging Situation

"Increasingly, original equipment manufacturers (OEMs) in a multitude of applications are approaching hydraulic pump equipment manufacturers to design, develop, and supply complete hydraulic systems," says the analyst. Clients' growing preference for a "one-stop-shop" facility has partly been responsible for triggering a wave of mergers and acquisitions (M&As) as companies aim to expand product range and network of outlets. With M&As expected to continue, smaller companies will have to focus on core strengths or cater to niche markets to compete effectively against the dominant larger companies.

This flurry of acquisition activity is also affecting distributors, as they face intensifying concerns about line availability: whether product lines they currently carry will continue to be offered; if not, the potential of distributing another manufacturer's line. In the aftermarket, where distributors play an ongoing role in unit repair and replacement, these concerns could eventually tilt the balance in favor of manufacturers that can offer long-term commitments.

Effective Integration Adds Value to Acquisitions

Although leading participants have improved market share through M&As, they have failed to effectively integrate the new companies in their operations or capitalize on their strengths. As the analyst says, "Utilizing the newly acquired company's entire distribution structure for the acquired as well as the parent company's line could extend the usefulness and advantages of the acquisition."

Finding new applications for existing products allows for greater economies of scale. However, determining the best fit for existing equipment as well as the right size of market to pursue could present a problem. Subsequently, educating potential customers about new application markets will require sustained marketing efforts. Establishing a strong presence on a relatively cost-effective medium such as the Internet could be a critical factor in delivering much-needed information.