Mumbai, Maharashtra, India
Industrial power plant services markets in western Europe represent a huge growth opportunity for turbine manufacturers, as profit margins continue to outstrip those of the new equipment business. The increasing proliferation of long-term service agreements in the market, particularly in the gas turbines sector, is expected to provide secure and stable revenues for maintenance, repair and overhaul (MRO) service providers over a long period of time.
This finding was revealed in a recent Frost & Sullivan (http://www.power.frost.com) end-user study based on primary research among nearly 100 power plant managers, as well as operations and maintenance managers involved in facilities management. The analysis focused on the MRO requirements/strategies of industrial power plants in western Europe.
If you are interested in a virtual brochure, which provides manufacturers, end users and other industry participants with an overview of the latest analysis of the European Industrial Power Plant Maintenance Repair and Overhaul (MRO) Strategies, send an e-mail to Samantha Unnikrishnan - Corporate Communications at sunnikrishnan@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country. We will send you the information through e-mail upon receipt of the above information.
High service margins in the gas turbine arena are expected to attract new entrants, such as joint venture and specialist companies. "The role of independent service providers in the market appears to be much smaller than in the utility MRO market although their presence is growing," remarks Frost & Sullivan Industry Manager Mr. Colin O'Hanlon. "Original equipment manufacturers (OEMs) are striving to keep independent providers at bay, increasing their emphasis on long-term service agreements."
However, the preference for outsourcing of services is not universal due to marked differences between the major technologies. For instance, the level of outsourcing in the gas turbine segment, which provides significant opportunities for gas turbine OEMs, is almost double to that of the steam turbine segment.
"Hence, major participants in the market are focusing on increasing the proportion of end-users they can tie-up in a long-term service agreement in order to maximise revenues," remarks Mr. O'Hanlon. "Such agreements will also prove beneficial to end-users, enabling them to concentrate on their core competencies."
Quality of work, value for money and lead time/speed of response were found to be crucial factors that influenced supplier rating. Technical know-how, though not overtly stated, was also suggested to contribute to the overall satisfaction of customers and hence, should not be ignored. However, in the selection of service providers, industry experience received higher importance ratings, demonstrating that it is the key competitive factor.
In the context of buying practices, four of ten respondents indicated that decisions related to periodic maintenance, as well as upgrades and maintenance were determined jointly by the headquarters and the power plant.
The study also indicated that in the majority of cases, routine maintenance was done in-house at the power plant, with just one-fifth of the respondents relying on third-party maintenance. Moreover, smaller industrial plants demonstrated a greater willingness to outsource routine maintenance.
Across the different equipment considered, OEMs were found to be the suppliers of spare parts, particularly in gas turbines, where only few independents possess the necessary reverse-engineering capabilities required due to the sophisticated nature of the technology.
Lead times for critical spare parts were discovered to have remained the same over the past two years. However, almost one third of the respondents remarked that lead times had increased, suggesting deterioration in service levels.
The survey revealed that major overhauls were provided by OEMs, particularly in gas turbines sector, due to technological complexities involved. In this context, nearly half of the respondents suggested that industrial MRO providers need to respond quickly in order to reduce the notice time required for major overhaul jobs.
While most respondents in the gas turbine sector were found to possess a full maintenance contract, the proportion was significantly lower for steam turbines and boilers, suggesting greater reliance on in-house expertise. Moreover, three of ten respondents expressed interest in a performance-based maintenance contract, thereby highlighting growth opportunities for MRO providers.
European Industrial Power Plant Maintenance Repair and Overhaul (MRO) Strategies is part of the Energy and Power Subscription, which also includes research in the following markets: cogeneration plants, steam turbine plants, combined cycle plants and gas turbine plants. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.
Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective and combines ongoing analysis of markets, technologies, econometrics and demographics. For more information, visit www.frost.com
European Industrial Power Plant Maintenance Repair and Overhaul (MRO) Strategies
B805-14
Samantha Unnikrishnan, Corporate Communications - South Asia & Middle East, Frost & Sullivan, + 91 (044) 4204 4667 sunnikrishnan@frost.com
Magdalena Oberland, Corporate Communications - Europe, Frost & Sullivan, + 44 (0) 20 7915 7876 magdalena.oberland@frost.com
Source: Frost & Sullivan (Business Wire India)
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