Trends Impacting and Reshaping the Low Voltage Controlgear Market

By Sharada Prahladrao

Category:
Technology Trends

Recently, ARC published a report on the Low Voltage Controlgear market – its common applications, trends, strategies, customer buying criteria, and the future outlook. Listening to an interesting conversation between Sal Spada, Research Director and David Humphrey (author of this report), I learned that low voltage controlgear consists of electromechanical devices that are part of a larger system of equipment and wiring.  Some of the common applications for low voltage controlgears are to protect motors and other electrical assets used in industrial machinery. Any motor can be connected directly to the mains, but nobody does it because of the danger of overcurrent/over voltage. Controlgear devices are placed between the mains and an electrical motor to regulate the current to provide a startup ramp; for example, for a smooth start with some motors, but mostly just to protect them from any sort of electrical surges, short circuits or over voltage.

low voltage controlgear Controlgear%20in%20Motor%20Control%20Center.JPG

 

Trends that are driving customers to change their buying criteria

One-stop shopping: It makes sense for users of equipment, like machine OEMs, to buy from a single source.  If they buy their control systems from ABB or Siemens, then why not take the low voltage controlgear from the same supplier?  That reduces the number of suppliers and makes the paperwork and the accounting and logistics easier.  Also, there is this general perception that the devices are pretty much all the same, so they are like commodities.  But if everything is sourced from the same supplier, general consensus is that these devices are sort of pre- integrated - that there's a better chance of synchronization and working together.

Smaller footprint: Devices in low voltage controlgear package a certain performance level into a certain package size.  Now, there is a technical trend in product development to create devices with a smaller footprint; keeping the same performance level but in a slightly smaller package, so you can fit more of them into the same space and electrical cabinet.  There's also a related trend to use the same size package but to have it deliver a higher performance rate at a higher current or higher voltage rating.  That would have the effect of also allowing consolidation of more devices in the higher power devices into the same size area and in the electrical cabinet.

Better protection: A trend that speaks for investments in low voltage controlgears is simply a consciousness of providing better protection to expensive manufacturing assets and equipment machinery lines on the factory floor.  This is related to the overall trend that end users are trying to get more usage, more lifetime out of assets they’ve purchased already; or they're expecting machinery that they buy in the future to last longer and can be supported by protecting the electrical devices, electric motors, and drives.  The common problems that plague them are surges, over current, over temperature, and over voltage.  These challenges can be overcome with investments in low voltage controlgear.

Factors that are driving the market and future growth prospects

The future market for low voltage controlgear is heavily dependent on the much larger markets for automation equipment.  So, if there is a boost in growth in automation in one industry, it's also going to be reflected in the low voltage controlgear market.

Asia has become the largest market, driven by the ongoing manufacturing boom, followed by Europe and North America.  Part of that growth is due to greater use of automation to replace manual workers as labor costs rise.  There is some growth potential that we've noticed in metals and mining. There’s been a surge in Asia and some Eastern European countries in demand for basic materials such as steel and copper.  We also expect that with the advent of e-cars more and more rare earth metals will be mined in different parts of the world, but especially in Asia, and we expect to see that result in a boost in growth for low voltage controlgear.

ARC sees an overall slowdown in growth occurring globally in the next two years.  There are indicators of the slowdown everywhere - from Germany to China, and we expect growth in global controlgear to plateau.  ARC’s projection for this market averages around 3 percent in the next five years, but in the next two years, it'll probably be lower, around 2 percent.  Low voltage controlgear components tend to be commodities or near commodities, and they're very interchangeable.  The market is not necessarily fragmented; there are a lot of suppliers offering more or less the same thing.  And there is long-term advantage of going to suppliers that offer a wider portfolio of products that includes automation equipment as well.  Hence, we expect to see some consolidation occurring in the market in the next few years.  It's hard to predict what companies will be targets, because companies that sometimes seem likely to converge, never manage to get together for financial reasons that are discussed discreetly, but if you keep an eye on the market, you'll probably see some of the smaller suppliers being acquired by larger suppliers.

Strategic initiatives and future trends of low voltage controlgear market

For suppliers of low voltage controlgear it's important to avoid the commodity trap.  Even though these devices are to a large degree interchangeable, it's possible to sell on something other than price.  Devices on the market are not all equally rugged or durable, so if you sell in two harsh environs/markets like the US, where there's a perception that devices need to be especially tough and rugged, make your products to these specifications and differentiate yourself based on criteria that your customers are looking for.

Key supplier strategies include:

  • Avoiding price competition
  • Offering integrated motor management systems
  • Identifying new growth markets
  • Setting up reliable distribution channels

The market for controlgear may be mature, but there is still some room left for innovation in the market.  Besides ruggedness, durability, and package size connectivity, monitoring and diagnostics are also areas that are still not fully explored.  Continuing on about innovation there is a big wave to provide connectivity between products in the Industrial Internet of Things.  This concept makes devices smart - it puts intelligence in edge devices.  This trend has already been realized in motor management systems from some suppliers.  A motor management system takes several components and connects them and adds some monitoring logic to it, so, it's adding a bit of intelligence.  In the future you can probably expect to see more diagnostic information realized with basic small compact intelligence right where the device is connected, or can be connected, to the rest of its network to share information as an edge device and provide much better diagnostics than is possible today.

For further discussion on the low voltage controlgear market, please contact DHumphrey@arcweb.com.

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