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End Uses and End Users of Small Electric Motors

Business Economics, April, 2000 by Michael Deneen, Andrew Gross

This article describes the market and outlook for small electric motors, which power an enormous variety of consumer and producer goods.

Introduction

Fractional horsepower electric motors are used in virtually every sector of the U.S. economy, mostly installed as components of original equipment. Thus, developments in this industry are likely to have widespread ramifications throughout business. There are three types: general purpose AC (alternating current); general purpose DC (direct current); and special purpose DC. They come in small sizes (a few inches), weigh little (a few ounces), and have just four parts (stator, rotor, an enclosure for bearings, lubrication, etc., and a shaft). AJI three have undergone evolutionary technical changes in recent decades, and further refinements are expected. The key technological and marketing trends are toward modules and miniaturization.

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These small motors have five major end uses: motor vehicles; appliances and other consumer durables; heating and cooling machinery; computers and office equipment; and various industrial machines. Unlike many other machinery components, replacement demand for fractional horsepower motors is limited, since these small motors often last longer than the end-use product itself. Relevant statistics on both product and market categories for the United States during the 19892008 period are shown in Table 1. The percentage distribution among sectors is changing, but at a very slow pace. In 1998, the figures for the five sectors were, respectively, 35, 15, 15, 14, and 21 percent, quite similar to the 1989 data.

The light vehicle market will remain the largest user of fractional horsepower motors due to the wide range of applications, but its relative importance will shrink from the current thirty-five to thirty-two percent by 2008. A saturation level has been reached for power accessories for new passenger cars. However, the new light truck and van market will provide growth opportunities for two reasons. First, demand for such vehicles is still growing faster than that for cars. Second, while the trucks traditionally have been less laden with accessories, drivers of such trucks now want more comfort and gadgetry. Truck and van makers are eager to please customers; furthermore, an "all-comfort" truck commands a higher price and delivers fatter margins to manufactures.

The appliance and related durable sector is another mature market. Included here are makers of washers, refrigerators, ranges, dishwashers, etc., as well as those who offer vacuum cleaners, household fans, and the largest single category, food preparation equipment. The original equipment manufacturers (OEMs) in this sector also demand better performing (smaller, quieter, more energy efficient) small motors to meet their own and households' preferences. Furthermore, these QEMs exert strong pricing pressures, emulating the action of light vehicle manufacturers. Since vendors are routinely scrutinized, it is no surprise that suppliers to this sector are also engaged in "relationship marketing," eager to remain on the "short list."

The heating and air-conditioning market is one area where there is both OEM demand and a definite replacement demand. The latter occurs because working conditions for small motors are demanding (dirt, soot, etc.) and also because it is easy and cost-efficient to replace small motors.

The computer and office equipment market remains an important destination for higher quality, more sophisticated fractional horsepower motors; this segment will increase its relative share from 14.0 to 16.5 percent of total demand during the current decade. Small motors are built into computers, copiers, and fax machines. Peripheral office equipment demand is likely to remain strong, since such machines use small motors for disk drives, tape drives, rollers, etc.

The industrial and commercial machinery market utilizes small motors in many applications. The industrial subsector uses the fractional horsepower motors in automation, materials handling, off-highway, and other equipment. The commercial subsector uses the small motors in food preparation, medical, and telecommunications equipment as well as in vending machines. A third sub-sector consists of aerospace goods, recreational vehicles, and exercise equipment. Consumer demand for various recreational vehicles should be a positive factor for growth, but the other uses constitute mature markets.

Economic-Market Environment and International Trade

The demand for fractional horsepower motors fluctuates chiefly in response to trends in the key end-use industries whose products incorporate these devices. Conditions in the motor-vehicle sector--which takes thirty-five percent of all small motors--are especially crucial. Activity in this sector, in turn, is dependent on consumer confidence, interest rates, and inflation. Inasmuch as the confluence of these three has been favorable, good times in the automotive industry has meant good times for small motor manufacturers, too.

Business Services Industry

End Uses and End Users of Small Electric Motors

Business Economics, April, 2000 by Michael Deneen, Andrew Gross

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