Recently, Kline experts, Milind Phadke and George Morvey revealed top line findings from one of our recently completed studies, Global Metalworking Fluids 2010: Market Analysis and Opportunities, in an insightful webinar. Here are some of the topics the webinar has touched upon.
The global market for metalworking fluids did not escape the effects of the economic recession.
Despite the contraction in 2008-2009, Asia emerged as the least negatively impacted. In fact, since 2007, Asia posted a positive annual growth rate (CAGR) of 3.3% in demand for metalworking fluids. Within Asia, China, Japan, India, and Korea are the four largest markets accounting for 90% of regional demand. Europe and North America did not fare as well.
Demand for metalworking fluids in Europe dropped by 1.8% CAGR since 2007. “This is not as bad as one would expect – Milind Phadke said- if you consider how significantly the recession has impacted countries like Greece, Ireland and Portugal”. Unlike these three countries, Germany and Russia, the two largest manufacturing economies in Europe, have shown strong recovery keeping overall European level of metalworking consumption pretty high.
North America took the brunt of the recession. Metalworking fluids consumption in North America in 2010 was considerably subdued compared to 2007 – average annual growth rate during this period was (7.8). But, for Kline industry expect, George Morvey, “there is light at the end of the tunnel”. Transportation equipment production accounts for about 31% percent of the overall demand for metalworking fluids, holding the largest share by end-use application. “In 2010 North America (automotive) production was back up to 12,2 million units from 8,8”, Morvey said, stressing that automotive production is expected to grow further in 2011, which will impact positively demand for metalworking fluids. Morvey pointed out that Volkswagen has just recently opened a new car assembly plant in North America.
Growth will be moderate as there is an undeniable overall shift away from Europe and North America to Asia. For instance, automotive production has gone up in Asia from 23.4 million units in 2004 to 29.6 in 2007 and 32.2 million units in 2010, while production in Europe and North America has decreased since 2004 by 1.8, and 2.4 million units, respectively.
Looking forward to 2015, Kline forecasts Asia to post a 5% CAGR, North America 2%, and Europe 1%. For Asia growth will be driven not only by an increase in the domestic demand, but also as a result of continuing relocation of manufacturing facilities from high cost economies to low cost economies. The manufacturing shift to Asia is likely to be to some extent dampened as – post-recession – many of the governments in North America and Europe are focused on making their economies less overly- dependent on services and retaining whatever manufacturing strengths they have. The extent to which we’ll witness this in practice is “a highly politically charged question, and we’ll need to see how dynamics play out”, said Milind Phadke in the conclusion of the webinar.
Contact us for the webinar recording.