Abstract
Shifting of Manufacturing Bases to Low-Cost Countries Poses Challenge
The increasing globalisation of European economies is bringing with it some key challenges for
vendors of calibration services. With the need to cut production costs in order to compete with
global companies, end-user industries are moving their manufacturing bases to low-cost regions such
as Asia. This shift among manufacturing industries, that form major accounts for calibration
vendors, has lead to a fall in the demand for calibration services in western Europe as well as a
dip in the associated revenues. Further, fragmentation of the market is leading to pricing and
margin pressures and vendors will need to update their technical know how and expand beyond existing
geographic markets to stay competitive.
This Frost & Sullivan research service examines the European markets for calibration
services. It includes market opportunities and industry trends that have been evaluated following
extensive interviews with market participants. Also, the study provides exhaustive analysis across
key product segments and end-user groups such as communications, electronics manufacturing,
industrial and automotive, aerospace and defence and others end-user segments.
Need for Product Quality Drives Demand
In the context of a global marketplace, organisations are moving towards quality certifications
to ensure a competitive advantage. While quality certifications improve profitability for
industries, they also stipulate the regular calibration of instruments for determining performance
specifications and traceability. As test equipment deployed in production lines are critical to
assuring product quality, the maintenance of these equipment is likely to provide a regular stream
of revenues for the calibration services industry. This is a key driver that is expected to aid the
growth of the calibration services market in Europe over the coming years.
While attempting to achieve greater cost efficiency, companies are beginning to focus on their
core competencies while outsourcing other activities to third-party vendors. In line with this
trend, companies are willing to outsource their calibration needs to vendors that offer calibration
support with proper traceability and quality assurance as per certification requirements. "An
added factor driving demand for outsourcing is the non availability of requisite standards and
in-house expertise to calibrate certain equipment," says the analyst of this research service.
"The costs of procuring these resources could be expensive in relation to the required volume
of calibration, making outsourcing a more feasible option."
Enhancing Service Delivery Portfolio could Ensure Better Revenues
With more and more companies outsourcing their entire calibration requirements, vendors in the
European calibration services market have access to better business opportunities. In capitalizing
on this positive trend, vendors will need to expand the scope of their services and develop
capabilities to cater to maintenance, calibration management, asset tracking and, possibly, sourcing
of used equipments. While this is likely to help increase overall revenues, constant updation of
skills and technical know how is vital to maintaining a competitive advantage and delivering better
end-user service.
The calibration of electrical parameters is generating the highest revenues and a large installed
base of electrical equipment, coupled with growth in the telecommunication sector, promises
continuing demand. "The fragmented European calibration services market is expected to
consolidate, with larger companies acquiring smaller participants," says the analyst.
"This could see the emergence of more pan-European participants while the entry of original
equipment manufacturers (OEMs) that are re-defining service delivery paradigms is expected to create
a positive change the market."
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