May 31, 2013 - The Asia-Pacific region this year will become the world’s largest market for flowmeters with sales revenue of $1.7 billion, according to IMS Research.
From 2011 to 2017, Asia-Pacific is also forecast to be the fastest-expanding region for flowmeter sales with a compound annual growth rate (CAGR) of 10.5 percent. This high growth can be attributed to greenfield investment, together with an increasing need for greater flow-measurement accuracy.
“China and India in 2013 will continue their decade-long effort to invest in infrastructure to address the needs of their growing population and rising energy requirements,” said Kiran Patel, process instrumentation and control analyst at IHS. “Capital expenditures in the oil and gas, chemical and power, and refining and petrochemical industries in these countries will drive demand for process instrumentation and measuring devices, including flowmeters.”
Many of the factors that are driving revenue growth for flowmeters in China and India are also evident globally.
“With a growing focus on environmental conservation, the monitoring of greenhouse gas emissions is increasingly important as businesses are keen to portray themselves as being green,” Patel said. “Another progressively important application is custody transfer. In the oil and gas industry, for instance, rising energy costs have driven the need for greater flow-measurement accuracy given that small percentage errors can result in significant costs.”
Cheap labor vs. flowmeters—and the price of quality
While China historically has had an abundance of human resources for low-skilled jobs, labor costs are rising and young people overall are choosing to pursue higher education, likely leading to the reduction in supply of cheap, low-skilled labor in the country. Such constraints in the labor force have affected process facilities in particular, resulting in a lack of technical, hands-on expertise at plant sites because low-skilled staff for the most part has been employed.
To help fill the gap, businesses are utilizing so-called smart flowmeters, which not only are easier to use and maintain but also provide online diagnostics if required. Still, these smart flowmeters come at a price premium—something that businesses are not always able or willing to pay. Instead, companies resort to using mechanical flowmeters—among the easiest to duplicate, with an increasing number of Asian manufacturers making the machines at low cost, often compromising quality.
And while local end-user industries with limited regional reach are most likely to invest in such products, typical process facilities tend to be managed by global players whose corporate image is paramount. Here reputations are at stake and large corporations cannot be seen to be using low-quality products that could affect production and efficiency or pose a safety risk to operators.
In such applications or scenarios, it is to the long-term advantage of manufacturers to use highly accurate flowmeter types, such as Coriolis, thermal mass and ultrasonic. IHS believes that these markets will experience growth rates of 16.0 percent, 14.8 percent and 12.3 percent, respectively, from 2011 through 2017.
Asia presents rich opportunities
Emerging Asian economies present an attractive destination for established flowmeter suppliers to set up manufacturing and sales bases.
Here they will come across companies with varying attitudes to pricing, with some happily settling for low-cost products from local suppliers, ultimately sacrificing quality. Because flowmeter products are generally viewed as commodity items by these types of end-users, it is unlikely that major flowmeter and instrumentation suppliers will gain an advantage by selling to this market, which would entail a loss of profit margin for their more sophisticated product offerings.
But as China and India begin to realize the benefits of investing in more efficient flowmeters, these more advanced products are sure to drive growth of the flowmeter market in the region.
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