The fluid power markets will likely see increased demand sometime between late 2009 and early 2010, states growth consultancy firm Frost & Sullivan in its economic outlook for the global fluid power industry.

Analysts’ expectations are that the rest of 2009 will show flat growth to slightly positive growth, resulting in strongly negative growth for 2009. Sales are expected to increase towards the end of the first quarter of 2010, and then slowly increase throughout the remainder of the year.

“Though the general economic recovery will be well on its way at that point, it is expected that many key end-user groups may delay new capital expenditure owing to a fear of a false start to the recovery,” the consultancy reports.

Many of the high-performing markets for fluid power are expected to remain positive during the economic crisis. Though growth rates have declined in these areas, it is expected that the agricultural equipment, food and beverage, construction equipment, materials handling, metal and mining and aerospace markets will experience the quickest growth recovery in 2012.

“Areas of lower growth potential or slow penetration, such as marine and industrial machinery, are expected to suffer the greatest declines and likely to be the most difficult markets for swift recovery,” the firm states.

Frost & Sullivan analysts point out that, for the first half of 2009, the fluid power industry experienced negative growth of between 25% and 30%, with some companies having reported negative growth of 40% over the same period in 2008; however, many of companies are reporting a slowing in the negative growth being experienced and are receiving more business inquiries. New orders are still slow.

Frost & Sullivan states that during the economic downturn, end-users are expected to be less likely to invest in new equipment and more likely to rent equipment. This will place a higher demand on idle equipment and create a need for rental companies to repair or replace older model products in their fleets.

There is an expected increase in demand for replacement components, as end-users continue to maintain existing equipment, while waiting for capital funds and increased product gene- ration from manufacturers. Manufacturers are producing less, based on the reduced overall demand.

“There was a huge inventory that needed to be consumed before customers placed new orders and, while much of that inventory has been depleted, customers are still being cautious about expenditure,” reports the consultancy.

The North American fluid power markets have been heavily affected by the recession, but demand from construction, agriculture and materials handling applications is expected to drive fluid power business in this region.

In South America, agricultural applications are expected to show strong growth owing to increasing demand for alternative fuel sources. The mining markets should sustain the growth of equipment that uses fluid power components.

In the Middle East and Africa, infrastructure and construction projects are expected to continue. Strong demand from the oil and gas segments in Saudi Arabia and the United Arab Emirates is expected to continue.

There is a strong demand in the replacement markets in Europe and continued demand in the agriculture markets. Continued construction throughout Europe, resulting from government stimulus, will drive the replacement market.

Continued investments from end-user segments, such as construction and healthcare, will drive demand for fluid power in the Asia-Pacific regions. Opportunities from the automotive industry in these regions are also expected to continue.

Frost & Sullivan states that, viewed through the prism of market dynamics, the pneumatics markets demonstrate a high degree of simi- larities globally. However, the differences are distinguishable. Electronics and semiconductor applications have diminished in North America, but are experiencing significant growth in the Asian regions.

While growth in most of the pneumatic applications has slowed, the anticipation is that the food and beverage, materials hand- ling, oil and gas, and electronics and semiconductor markets will experience the quickest recovery in 2012.

The consultancy reports that over the past five years, innovations in fluid power have been centred on cost and space saving techniques. The current economic conditions force end-users to focus more on reducing costs, resulting in more demand for these types of technologies.

Many advancements in renewable energies, such as solar, wind and geothermo, have been made in the last ten years. Introducing these technologies in industrial hydraulic or pneumatic pressure generation could gene- rate end-user interest, because of the cost savings benefits. Frost & Sullivan concludes that looking to these technologies for poten- tial use in fluid power generation could have resounding effects on many market segments.