Variable-speed drive OEM market shifting from North America

Despite slight projected revenue gains through 2010, variable speed drive (VSD) manufacturers in North America still face a shrinking client base because the OEMs they serve are shifting production to newly industrialized countries, according to recent research by Frost & Sullivan. The study, “North American Variable Speed Drives Markets,” found that the VSD market generated revenue of $1.54 billion in 2004, and is expected to reach $1.73 billion in 2010.

Emerging nations reportedly can offer improved productivity and lower manufacturing costs, and this is encouraging OEMs to establish foreign subsidiaries and factories. Even though it fosters more global penetration, this trend is depleting the North American end-user market. “OEMs are seeking component sources closer to the countries where their facilities are located, and this reduces demand for variable speed drives in the domestic market,” says Liliya Navarette, Frost & Sullivan’s industry analyst.

Due to recent OEM relocations, Frost & Sullivan reports that several North American drives plants have either shut down or restructured to produce smaller volumes. To retain business, some manufacturers are developing strategies to meet customers’ overall needs locally and internationally. Also, intense competition between manufacturers is sparking price wars, making products more affordable and encouraging adoption.

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