It would be fair to say that sales of soft starters have been slow in recent years. Unlike many other industrial automation equipment markets, this is not solely due to unfavorable economic conditions. Though the poor state of the global economy since the financial crisis in 2009 has undoubtedly had a major impact on sales, this is not the only issue.
In recent years, soft starters have steadily lost market share to more capable variable-speed drives (VSDs), despite VSDs costing more. Though VSDs offer additional control options for motors that run at variable speeds, their increased use has been driven by other functionality—including remote or centralized control as part of a connected factory, monitoring and support for preventive maintenance, and even more basic functionality such as arc-resistant enclosures.
For makers of soft starters, this is fortunately a simple problem with a simple solution: If people want additional functionality, give it to them. Many suppliers of soft starters are now moving in this direction—offering products with the same functionality that has been attracting people to VSDs. Arc-resistant enclosures have already become fairly standard, and support for communication protocols is becoming increasingly common. Less standard features such as integrated motor braking and pump cleaning are even being presented as key selling points.
However, all this additional functionality comes at a price. Soft starters already have low profit margins, so the addition of these extra features is likely to drive up the price, although they will continue to cost far less than VSDs. But price is still a consideration for many; many users of soft starters continue to use them precisely because they aren’t interested in having the functionality of a VSD. Many don’t want to pay extra, especially at a time when the global economy and several industries are still struggling.
This means that the addition of extra functionality is driving a greater divergence of soft starter product types, between the more basic, simpler soft starters and their more capable cousins. It is therefore possible to get an idea of the relative success of these two types of products by looking at changes to their average price.
While there are other factors that affect pricing, for the past couple of years the average selling price of both low-voltage and medium-voltage soft starters has increased steadily across all regions. This suggests that the main driver for this price increase is the nature of the products being sold, rather than a combination of local market fluctuations and changes of exchange rates. It is therefore reasonable to assume that at least some of this price increase is caused by increased sales of the more expensive, higher-functionality soft starters.
While it would be easy to assume that this trend will continue, there are several barriers that must be considered. The most obvious is that prices cannot continue to rise forever; instead, soft starter prices will reach a new equilibrium, with many customers still choosing the more basic products.
Additionally, while soft starter suppliers might find it comforting to believe that they have stemmed the loss of market to VSDs, this is unlikely to be the case. Sales of VSDs are still forecast to grow faster than those of soft starters, because of both the usual reasons, and because of legislation. For example, (EC) No. 640/2009 will drive sales of VSDs, often at the expense of soft starters.
It is therefore reasonable to conclude that though the introduction of more capable soft starters has helped soft starter vendors compete with VSDs, these developments have only served to slow rather than stop the trend toward VSDs. And though soft starter vendors will continue to release more capable and connected products, it is unlikely that there will be any reversal of this continuing trend in the foreseeable future.
>> George Dickinson, [email protected], is an analyst in industrial automation for IHS.
