Market Insight

Health of the medium-voltage motor market in the Americas

June 13, 2017

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Gauging today’s market for medium-voltage motors in North America paints a bleak picture. “Hyundai Ideal closed its facilities in Ohio in 2016, GE Canada has gone through more layoffs, and Siemens Norwood (OH) is not doing well right now” mentioned one industry expert. However, there is expectation of an uptick spurred by the oil and gas industry in the second half of 2017. The best outcome for 2017 is a slow to moderate increase, which many individuals invested in this market are expecting to signal that the market has bottomed out.  The midstream pipeline business has the potential to heat up; getting the oil and gas where it needs to go is one of the biggest hindrances in North America.

There is a different yet similar picture for Central and South American suppliers. Of Latin American countries, Brazil is the dominant supplier, and its political situation is hindering growth. The Real was one of the strongest currencies compared with the US Dollar during the 2016 calendar year with a 20% increase. Currency is one of the factors affecting the medium-voltage motor market as North American purchasers, for the most part, differentiate between motor suppliers by price alone; and the relatively strong US Dollar plays a big part when choosing a motor supplier. Furthermore, Mexico is a very respectable producer of motors to the United States as well, and the exchange rate of the Mexican Peso had decreased 15% compared with the US Dollar during the 2016 Calendar year. Looking forward, both the Brazilian Real and Mexican Peso are expected to decrease against the US Dollar.

One thing for certain is that the market for medium-voltage motors has been depressed as a result of low capital expenditures globally, and specifically within the oil and gas market since late 2014. Oil and gas plays a large part, as this industry makes up nearly 30% of global revenues.  The sentiment moving forward is that pent-up capital expenditures are expected to lift the medium-voltage motor market in late 2017, continuing into 2018. 

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