Electric Heating Element Industry to Grow Only 1.6% in North America
9/30/2003 - A new study from Venture Development Corporation (VDC) titled "The North American Market for Electric Heating Elements: Conduction Heating, Convection Heating, Radiant Heating" finds the combined North American market for 23 types of electric heating elements exceeded $1 billion in 2002. With the expectation of slow unit growth and strong price pressure, the overall North American market for these elements is only expected to increase at a 1.6% compound annual growth rate (CAGR) through 2005.
The overall North American markets for electric heating elements is mature, and growth rates on units for the period 2002 through 2005 are forecast in the study at between 0.7% (for tubular element conduction applications) and 7% (for flexible elements), with the median at only 2%.
Included in the study were the following types of electric heating elements:
- Conduction - Band, Cartridge, Cast-In, Coil/Cable, Drum, Flexible, Strip, Tubular
- Convection - Circulation, Duct, Finned Tubular, Flanged Immersion, Open Coil, Over The Side Immersion, Screw Plug Immersion, Tubular
- Radiant - Ceramic, Ceramic Fiber, Etched Foil, Glass/Quartz, Glass Top Range, Tubular, Metal Sheathed Panel
The largest 2002 shipment level was of tubular elements (see Figure 1), which accounted for about 29% of the total. Shipments of the five largest product categories (tubular, flexible, open coil, glass top range and cartridge) combined accounted for 70% of total shipments.
By product types, the highest growth rate is forecast for flexible heating elements in industrial and other non-consumer/residential applications, at a 6.2% CAGR. At the other extreme, a slight market decline is forecast for tubular elements in conduction consumer appliance and other consumer/residential applications.
A number of factors entered into the North American market forecasts for electric heating elements, including:
- The generally poor state of economies in North America, and of the various industry segments where electric heating elements are used. VDC's composite impression from the data collected is general expectations of moderate recovery over the next two years. More robust recovery is expected in some segments, such as for the semiconductor industry.
- Strong price competition is adversely affecting the dollar volume of shipments. Increasingly, lower-priced products manufactured in Mexico and China are entering the market. This in turn is providing motivation for U.S. and Canadian manufacturers to shift their manufacturing to these countries. This is further increasing the price pressure. Average prices on some of the products are expected to decline as much as 2% per year over the forecast period. None are expected to increase, although the average prices for several are expected to hold steady.
- Changing needs in the types of heating elements being purchased. For example, the consumer glass top range market is growing faster than that for other ranges. Also, newer technologies like flexible heaters can provide improvements in solving heating problems versus other methods. This leads to displacement of some other technologies, in addition to creating some new applications.
- Ongoing shifting of manufacturing and process operations that use electric heating elements to offshore locations with lower operating costs, particularly labor costs. This reduces the North American markets for electric heating elements, both for products being manufactured, and for use in facilities. Further, it increases pressure on manufacturers who have not relocated to reduce their costs. These firms in turn place more pressure on the heating element vendors to reduce their prices.
About VDC
Founded in 1971, Venture Development Corporation is a technology research and management consulting firm serving the worldwide industrial automation, instrumentation, electronic components, computing, communications, software and power systems industries.
For further information about "The North American Market for Electric Heating Elements: Conduction Heating, Convection Heating, Radiant Heating" or any other VDC service contact: Marc Regberg, Vice President, 508-653-9000, Ext. 111, msr@vdc-corp.com
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