Product replacement trends in the market for geared products
The market is forecast to return to growth in 2014, with revenues projected to increase 4.7%.
Following two straight years of revenue declines, the market for industrial geared products was worth $12,624.4 million in 2013, according to the latest IHS study on gearboxes and geared motors. The market is forecast to return to growth in 2014, with revenues projected to reach $13,218.2 million, a 4.7% increase. Still, this would leave the market about 0.7% below the previous peak level reached in 2011. The following explains internal product replacement trends, which are currently boosting revenues in the market for geared products, and also identifies the external product replacement trends that have the potential to negatively affect market revenues. Please note that the research focuses on gearboxes and geared motors used in industrial applications and excludes precision-geared products as well as geared products used in propulsion systems.
Internal product placement
IHS tracks the use of four different types of geared products, helical, bevel, worm and planetary, which vary in terms of solution capabilities, cost, energy efficiency, and size (compactness). The decision to use a particular geared type is driven first and foremost by form, fit and function, but there are many applications where multiple gear types are capable of providing an adequate solution, creating a significant opportunity for internal product replacements. Currently, concerns for energy efficiency are having the biggest impact on which product types are gaining and losing share in the market. Increasingly, the lifetime cost of industrial automation equipment is taken into consideration, which may drive the purchase of a different type of geared product than that of an end-user who only considers the upfront equipment cost.
Since worm gears offer the lowest upfront cost (but are the least energy-efficient geared solution), they continue to be most affected by product replacement trends, losing share primarily to bevel gears, but also in some cases to helical and planetary gears as well. Despite their inefficiency, worm-geared products still represented a significant proportion of sales in the market in 2013, accounting for 35% of unit shipments, for a number of reasons. First, there are applications in which the payback time of a more efficient solution is too long (or never achieved) to justify the additional upfront cost, such as those with low-power requirements or that are run intermittently. Worm-geared products are typically found in applications with power ratings below 4 kW and gear ratios below 10:1 because the efficiency of a worm gear decreases significantly as the gear ratio increases. Further, worm-geared products offer advantages over their more efficient bevel counterparts, including compactness, and are better suited for applications that require reversibility or have a high shock load. Thus, the worm gear type is certainly not going away any time soon, as it continues to have an important place in the geared market as a very cost-effective solution.
However, worm-geared products also continue to be chosen for applications where a more efficient gear type would provide significant savings in terms of energy costs in a relatively short period of time, creating significant potential for worm-geared products to lose share. The replacement of worm-geared products with bevel-geared products is not new as worm-geared products have slowly been losing share for over a decade. The trend has been most prominent in EMEA, where it began earlier and has occurred more quickly than in the Americas or Asia Pacific, but suppliers report that the trend away from worm-geared products continues to accelerate in all three regions due to increased focus on the benefits of energy efficiency. Greater awareness can be attributed to a variety of factors, including energy efficiency legislation, environmental concerns, energy management software, and even marketing campaigns from the suppliers of geared products, which benefit from the sales of more energy-efficient gear types due to their higher profit margins.
One of the biggest barriers to the adoption of more expensive, energy-efficiency products is that the majority of the time the purchaser of the product is not the end-user who will benefit from the lifetime cost savings of a more efficient machine. Sales of geared products to machine builders are estimated to have accounted for over 54% of market revenues in 2013. A 2013 survey conducted by IHS found that machine builders prioritize the price of a product above six other key factors considered during purchasing decisions. The energy efficiency of the product ranked last because machine builders are not likely to spend more for energy-efficient products unless specifically requested by the end-user. Suppliers of geared products are increasingly engaging in marketing campaigns to demonstrate the lifetime cost benefits of energy-efficient products to convince end-users to request these products. For continuous duty applications requiring power above 5.5kW, worm-geared products will continue to lose share to the other geared product types.
Planetary-geared products are also benefitting from product replacement in stationary industrial applications. Planetary gears are the most efficient and compact gear type, but also the most costly. Solutions using planetary-geared products are well established in propulsion applications because mobile vehicles benefit significantly from the lower weight and size of a planetary-geared solution. For stationary applications, the traditional choice of gear has been either worm, helical, or bevel. Suppliers of planetary-geared products report that continued efforts to educate machine builders and end-users on the benefits of this solution have been successful, and machine builders are increasingly exploring whether the compactness of a planetary-geared product can be used to achieve a more condensed, efficient machine design.
The shift towards planetary-geared products is occurring primarily for low-speed applications requiring torques above 5000 N∙m. The size of a helical- or bevel-geared solution increases significantly with torque, and above this range, a planetary-geared solution occupies about half of the space of a torque-equivalent helical or bevel solution. Thus, the adoption of a planetary solution creates the opportunity for the design of a significantly more compact machine. However, because of the compactness of planetary-geared solutions, such replacement is only possible for low-speed applications. The amount of heat generated by a high-speed application requires a gear with a large surface area over which the heat is dissipated, so helical- or bevel-geared products provide a better solution for high-speed applications. The trend towards planetary-geared products in stationary applications is still relatively new and is currently occurring mostly in developed nations.
External product replacement
Geared products typically benefit from product replacement trends, as electromechanical solutions continue to take share away from more complicated systems involving mechanical components such as chains, sprockets, and wheels. These types of mechanical systems are still used in factories throughout the world, but the current replacement trend is stronger in emerging countries as opposed to developed regions where this has been an ongoing trend for decades. Complicated mechanical systems are most commonly found in factories that produce sugar cane, cement and steel as well as material handling applications, so suppliers selling geared products into these segments will benefit the most from this trend.
The two alternative technologies that pose the highest threat to geared products are direct drive "torque" servo motors and variable speed motor and drive combinations. These alternatives compete almost exclusively with geared products in the lower-torque ranges, typically below 10,000 Nm, which accounted for 55% of revenues and 88% of unit shipments in the market for geared products in 2013.
Torque motors are more energy efficient than geared solutions and provide more accurate motion with significantly less maintenance requirements. The principle barrier to the adoption of a torque motor is the high cost, as this motor type utilizes a significant amount of rare-earth magnets to generate such large torque in a compact space. The steep rise in the price of rare-earth magnets in 2011 forced suppliers of torque motors to raise prices, negatively affecting the ability of this product to compete with geared products. However, the increase in rare-earth mineral prices was so drastic that most suppliers were not able to raise prices enough to maintain prior profit margins. The price of rare-earth minerals has fallen significantly since 2011, but concerns about future price instability remain, as China continues to produce over 90% of the world's supply.
For these reasons, many manufacturers continue to price torque motors relatively high, and the trend towards replacement of geared products with torque motors remains lower compared to the levels seen prior to the second half of 2011. For the torque range below 10,000 Nm, IHS estimates that the average selling price for a torque motor is approximately $3,500, which is approximately $2,500 more than the price of a geared-motor solution. Because of their high cost, torque motors are primarily used in niche applications that require both the accuracy and torque that this motor type can provide, and the market size for torque motors remains about one-hundredth the size of the geared products market in terms of unit shipments. Nevertheless, torque motors are used as an alternative to geared products for applications with speeds above 600 RPM; such applications are estimated to account for 10% or less of geared product applications.
Also competing with geared products are motors paired with variable frequency drives (VFDs). The design and functionality of motors and VFDs continue to improve, expanding the range of speed and torque outputs that can be achieved with a gearless solution. Currently, output torques around 10,000 Nm can be achieved using a standard low-voltage motor and VFD combination, and IHS predicts a gradual increase in this maximum torque. However, a much larger motor is required to achieve such high torque levels without gearing, resulting in an upfront cost for the gearless motor and drive system that is usually significantly higher than the cost of an equivalent geared system, thus limiting this product replacement trend.
IHS believes that external product replacement will continue to have a very limited impact on growth in the market for geared products. On the other hand, internal product replacement trends are significantly affecting the growth of the various geared product types included in IHS studies. Growth in the market for planetary-geared products is accelerating as this product type gains acceptance in stationary applications and takes share from helical, bevel and worm gearing. Conversely, growth in the market for worm-geared products continues to slow as users opt for more energy-efficient geared types. These internal product replacement trends are also boosting total revenues as the market shifts towards more expensive product types.
Michelle Figgs is a senior analyst within the industrial & medical technology group at IHS. She manages the Motion Controls and Gearboxes & Geared Motors research. Edited by Brittany Merchut, Project Manager, CFE Media, firstname.lastname@example.org