New market opportunities emerge for electric motors in Russia and Ukraine

Revenues in the Russian electric-motors market will rise to $1.5 billion by 2012, while the Ukrainian electric-motors market will expand to $287.8 million over the same period, say analysts at Frost & Sullivan in London.

While old and outdated equipment is undermining the competitiveness of the Russian and Ukrainian manufacturing sectors, at the same time it is creating opportunity for replacement sales, Frost & Sullivan experts say in the report entitled “Emerging Opportunities in the Russian and Ukrainian Electric Motors Markets.”

Russian and Ukrainian suppliers of electric motors may be forced to consider extending their product portfolios, as a route to supporting market share while better responding to customer needs.

“A substantial number of Russian and Ukrainian manufacturing companies are currently working with equipment that, in Western Europe or North America, would be considered obsolete,” observes Frost & Sullivan Research Manager Richard Tamworth. “As a result, most suppliers of electric motors to the Russian and Ukrainian markets expect the replacement cycle to intensify in the next few years, as many companies face the problem of not being able to operate if they do not buy new manufacturing systems or at the very least, new motors to drive their old ones.”

Despite the optimism of suppliers and broader industry recognition that relatively obsolete equipment is hampering their competitiveness in the global markets, only a few Russian and Ukrainian manufacturers-those connected to the oil trade, for example-actually possess the resources to invest in the modernization of their production facilities.

Many companies lack the capital to update their facilities, as their sales are low, their production capacities are often severely underused, and their margins poor.

“Although production companies realize they are using outdated equipment, many of them do not have the budget required to renew their production facilities. This lack of investment may prove to be one of the biggest setbacks for the Russian and Ukrainian motors markets, and perhaps their economies in general,” Tamworth notes. “Despite the gradual, if inconsistent improvement in the economic situation in these countries, many manufacturers are still obliged to repair existing equipment and motors and plan to buy new ones only when necessary.”

The inability or unwillingness of manufacturers to invest in new equipment has a number of more strategic ramifications. The overall quality or technology requirements of the Russian and Ukrainian markets are, typically, relatively low. Inevitably, companies with limited financial resources tend to focus on the basic configuration of electric motors.

“As a generic marketing strategy, Russian and Ukrainian electric-motor suppliers should therefore consider offering comprehensive product portfolios where a customer has several component options, mixing ultra-low-cost basics, with more advanced, perhaps imported options,” advises Tamworth. “This will allow them to better accommodate widely varying customer needs and secure significant competitive advantage.”

For more information, or to buy a report, contact Frost & Sullivan online at www.motors.frost.com.


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