Now that the global economy is coming out of recession, manufacturers around the world are buying more motor controls. Record levels of growth have already been seen for motor controls consumption, and further growth is expected this year, according to IMS Research (recently acquired by IHS Inc.). That is creating a secondary trend: the locating of motor controls production closer to consumption. Now, production sites are closest to demand, which means good things for China, Brazil and Eastern Europe
“As these emerging economies become more developed and labor costs in countries rise, shifts towards other developing regions are inevitable as suppliers look to take advantage of the benefits an emerging market offers,” states IMS analyst John Kendall.
Production movement from Poland to other Eastern European nations has already begun, says Kendall, and in China suppliers are locating facilities in more remote areas of Western China or near Mongolia. As suppliers try to maintain local presence while at the same time keeping labor costs down, Southeast Asia and India are expected to see a rise in manufacturing facilities over the next decade as well.
China is the fastest growing regional market for motor controls, and many manufacturers have and will continue to shift portions of their production load to the country. says Kendall. Another contributing factor to production expansion in China is directly related to the restrictive tax policies and import duties suppliers face. The Asia Pacific region, excluding Japan, is expected to produce 49 percent of motor controls units in 2015, up from 41 percent in 2010.
Few suppliers currently manufacture motor controls in Brazil, but many are expanding production facilities in the region. "Economic and industrial growth in Brazil provides large opportunities to suppliers opening manufacturing locations in the country, as presence in the region is necessary due to restrictive import duties of 14 percent on all factory automation products and minimum production requirements for local projects," said Kendall.
Eastern Europe and in particular, Poland and Romania, have benefited from the localization trend as suppliers continue to set up new facilities in reaction to European demand for motor controls. "The cost of labor in Eastern Europe and the close proximity to some of the largest machine producing countries, including Germany and Italy, is attractive to many suppliers," said Kendall. "The EMEA market for motor controls was the largest regional market until Asia Pacific surpassed the region in 2010. With motor control demand continuing to increase across Europe and in large markets such as Germany and Italy, additional manufacturing solutions will be necessary for many suppliers."
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