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Emerging Growth Markets for Nondestructive Test (NDT) Inspection Services

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Emerging Growth Markets for Nondestructive Test (NDT) Inspection Services

  1. 1. Emerging Growth Markets for Nondestructive Test (NDT) Inspection Services Brazil, India, China, and South Africa Offer Long-term Growth Prospects NBE0-30 June 2013
  2. 2. 2NBE0-30 Research Team Vijay Mathew Program Manager Measurement & Instrumentation Nikhil Jain Senior Research Analyst Measurement & Instrumentation Lead Analyst Research Director Corporate Communications Representative Jeannette Garcia Corporate Communications Measurement & Instrumentation +1.210.477.8427 Jeannette.Garcia@frost.com
  3. 3. 3NBE0-30 Contents Section Slide Numbers Executive Summary 4 Market Overview 8 Emerging Growth Markets for NDT Inspection Services - • External Challenges: Drivers and Restraints 15 • Forecasts and Trends 23 • Market Share and Competitive Analysis 34 Brazilian Breakdown 38 Indian Breakdown 51 Chinese Breakdown 64 South African Breakdown 75 The Last Word (Conclusions and Implications) 87 Appendix 90
  4. 4. 4NBE0-30 Executive Summary
  5. 5. 5NBE0-30 • The emerging growth markets for nondestructive test (NDT) inspection services are estimated to generate $367.8 million in revenue in 2012. • Oil and gas and power generation are the dominant end-user industries in the emerging growth markets. • Brazil’s revenue contribution to the emerging markets ranks highest, accounting for 55% of the total market in 2012. • Contrary to common perception, the Chinese NDT inspection services market is fairly small. It is the smallest of the 4 growth markets under study, but growth prospects are high. • The South African market has the highest growth potential with a booming economy providing investment in new power generation infrastructure, which is driving the NDT inspection services market. • The competitive landscape consists mainly of local participants in Brazil, India, China, and South Africa, with only a few major global companies able to enter the market. • There are approximately 450 companies battling in these competitive markets. • It is expected that over the forecast period consolidations in the market will result from mergers and acquisition. Executive Summary Source: Frost & Sullivan
  6. 6. 6NBE0-30 Compound Annual Growth Rate 10.9% (CAGR, 2012–2017) Market Concentration 23.0% (% of market share held by top 3 companies) Executive Summary—Market Engineering Measurements Market Stage Growth Market Revenue $367.8 M (2012) Market Size for Last Year of Study Period $615.6 M (2017) Base Year Market Growth Rate 7.4% Customer Price Sensitivity 8.3 (scale:1 [Low] to 10 [High]) Degree of Technical Change 6.0 (scale:1 [Low] to 10 [High]) Emerging Growth Markets for NDT Inspection Services: Brazil, India, China, and South Africa, 2012 For a tabular version click here. Stable IncreasingDecreasing Number of Competitors 425–450 (active market competitors in base year) Competitor Overview Market Overview Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan
  7. 7. 7NBE0-30 Executive Summary—CEO’s Perspective 2 Advanced NDT services are expected to drive revenues in the emerging growth markets. 3 Oil and gas and power generation remain the dominant end-user industries in the emerging markets. 4 Extremely nationalized competition within the market keeps major global participants from gaining a foothold. 5 Quality of service is expected to be the key competitive differentiator over the longer term. 1 Brazil is the largest emerging growth market for NDT inspection services. Source: Frost & Sullivan
  8. 8. 8NBE0-30 Market Overview
  9. 9. 9NBE0-30 Market Overview Introduction The emerging growth markets for NDT inspection services are Brazil, China, India, and South Africa. China is the smallest. In China, end-user industries prefer performing NDT inspections in-house, instead of outsourcing. Brazil is the largest market and generated $202.3 million in 2012. South Africa has the greatest growth potential with a 19.2% CAGR. Similar to the global NDT inspection services market, the emerging growth markets for NDT inspection services are characterized by a large number of competitors, although most participants are relatively small. These participants, often referred to as the mum and pop shops of the industry, compete in the conventional NDT space. To put things in perspective, India possesses 200–250 market participants competing for a $50.8 million market. The key driver for the emerging markets in NDT inspection services is the demand from end-user industries such as oil and gas and power generation. High oil and gas prices ensured that these operators earned significant revenue over the past 2 years. This revenue was invested back into developing the infrastructure in the energy industry. Source: Frost & Sullivan
  10. 10. 10NBE0-30 Market Overview (continued) Source: Frost & Sullivan A common challenge witnessed in the global NDT inspection services market is a lack of qualified technicians. However, this challenge is not witnessed in the emerging markets. India is the NDT education hub and provides trained technicians in country and to other regions like the Middle East. Similarly, in China, SGS established a PCN training center to bridge the gap between the quality of training being provided and the quality expected. This training center provides PCN certification and approximately 2,500 NDT technicians in various disciplines have been undergoing training since the inception of the training center. The emerging growth markets for NDT inspection services are experiencing high growth amid a difficult economic environment and are expected to continue growing over the next 5 years.
  11. 11. 11NBE0-30 Market Overview—Definitions Definitions For this study, the emerging growth markets for NDT inspection services have been segmented by end-user industry as follows: Oil and Gas Upstream Inspection of oil wells and rigs, both on- and offshore; and of drill pipes and drill collars, referred to as tubular goods inspection. Inspection of welds on the gathering lines, which connects the oil well to a gathering station or tank battery. Oil and Gas Midstream Inspection of infrastructure such as tank batteries, compressor stations, and pump stations; and of welds on the new construction pipelines connecting the gathering stations to the refineries. Assessment of erosion and corrosion on the maintenance of pipelines. Oil and Gas Downstream Inspection of refineries and petrochemical and of chemical plants driven by regulations. Power Generation Inspection of energy, utilities, co-generation, renewable, and non-renewable power plants. Others Inspection of aerospace, automotive, transportation, shipbuilding, and manufacturing industries; and of process industries such as pulp and paper and sugarcane. Source: Frost & Sullivan
  12. 12. 12NBE0-30 Market Overview—Definitions (continued) Geographic Scope India Brazil China South Africa Source: Frost & Sullivan
  13. 13. 13NBE0-30 Market Overview—Key Questions This Study Will Answer Which are the emerging growth markets for NDT inspection services? What are the key growth drivers and restraints for the emerging markets? Who are the major participants in these markets, and what are their market shares? Which are the strategic growth end-user industries? What are the biggest challenges that market participants need to overcome to achieve growth? Source: Frost & Sullivan
  14. 14. 14NBE0-30 Market Overview—Segmentation Brazil 55.0% India 13.8% China 9.3% South Africa 21.9% Percent Sales Breakdown Emerging Growth Markets for NDT Inspection Services: Brazil, India, China, and South Africa, 2012 Brazil is the most developed market for third-party NDT inspection services India is the third biggest; however, the market faces severe growth challenges China is the smallest amongst the 4 countries but possesses high growth potential The rapid rise in demand for electricity is driving investment in new power generation projects, which in turn is driving the NDT inspection services market Note: All figures are rounded. The base year is 2012. Source: Frost & Sullivan
  15. 15. 15NBE0-30 Brazilian Breakdown
  16. 16. 16NBE0-30 • Of the 4 emerging growth markets, Brazil is the largest and most mature market. • In the short-term, Brazil is expected to witness moderate growth due to macroeconomic issues such as high inflation, slowing gross domestic product (GDP) growth, and increasing interest rates that are slowing the capital investment. • However, it is expected that in the medium to long- term, the Brazilian market will reach high single- digit revenue growth rates. • Oil and gas and power generation are the most important end-user industries for third-party NDT inspection services in Brazil. • Investment in oil and gas infrastructure by the nationalized oil company, Petrobras, is the biggest driver for the market. • Any delays in investment by Petrobras negatively impact growth in the market. Source: Frost & Sullivan Brazilian Breakdown
  17. 17. 17NBE0-30 Indian Breakdown
  18. 18. 18NBE0-30 • Economic growth is suffering from a general policy paralysis that led industrial production to grow on average 1% over the past 2 years. • This paralysis also led the GDP to grow at a 6% average over the past 2 years, which is low considering the size of the economy. • Other macroeconomic challenges such as decreasing currency value, high current account deficit, and high consumer price inflation have brought the economy to a stand still. • These economic challenges have also had a negative impact on the NDT inspection services market, and a moderate revenue growth rate in the short-term is expected. • However, the economy is expected to recover and increase capital investment, which will drive the NDT inspection services market to double-digit growth rates by 2017. Indian Breakdown Source: Frost & Sullivan
  19. 19. 19NBE0-30 Chinese Breakdown
  20. 20. 20NBE0-30 • China’s revenue contribution is the lowest amongst the 4 emerging NDT inspection services markets. • This is attributed to the existing end-user business model that prefers performing NDT inspections in-house rather than outsourcing. • Considering China’s low cost of labor, the in- house NDT inspection model is considered superior to costly outsourcing. • But, it is expected that in the medium-term, with increasing wages and more global companies entering China, the demand for third-party NDT inspection services will increase. • Although growth is slowing, it is still high considering the size of the economy. Also, the recent government stimulus to quicken new infrastructure projects is expected to add to the economic growth. Chinese Breakdown Source: Frost & Sullivan
  21. 21. 21NBE0-30 South African Breakdown
  22. 22. 22NBE0-30 • South Africa’s growth pace over the past decade has outweighed expenditure in energy infrastructure. This resulted in an electricity deficit. • This deficit is being addressed by the South African government, as the 2 largest power stations are under construction. • Over the next 5 years, revamping and building new infrastructure to satisfy the needs of a growing population (with greater purchasing power) is expected to drive investment in the energy sector. • South Africa is a well run country, economically. The country has a healthy fiscal policy that led to low sovereign debt and stable inflation levels. • The GDP has been growing steadily for 2 years and is expected to be stable for the next 5 years. • The NDT inspection services market is experiencing high growth, and high growth rates are expected for the forecast period. South African Breakdown Source: Frost & Sullivan
  23. 23. 23NBE0-30 Appendix
  24. 24. 24NBE0-30 Market Engineering Methodology One of Frost & Sullivan’s core deliverables is its Market Engineering studies. They are based on our proprietary Market Engineering Methodology. This approach, developed across the 50 years of experience assessing BRIC markets, applies engineering rigor to the often nebulous art of market forecasting and interpretation. A detailed description of the methodology can be found here. Source: Frost & Sullivan
  25. 25. 25NBE0-30 Additional Sources of Information The list of recently published deliverables in the NDT market are provided below. • World Nondestructive Test Inspection Services Market • Analysis of the Global Nondestructive Test Equipment Market • The Nondestructive Testing (NDT) Industry Survey • Analysis of the Industrial Digital X-ray Inspection Systems Market • Industrial X-ray Film Market The list of upcoming deliverables that are to be published in 2013 is provided below. • Analysis of the Global Ultrasonic Inspection Market • Analysis of the Non-traditional NDT Equipment Market • Analysis of the Global NDT Training Services Market • Analysis of the NDT Market in Oil & Gas • Analysis of the European NDT Market • Analysis of the NDT Software Market Source: Frost & Sullivan
  26. 26. 26NBE0-30 Learn More—Next Steps • Talk to an Analyst • Take our DNA Survey • Arrange a Growth Workshop • Explore the Growth Excellence Matrix 2.0 Source: Frost & Sullivan

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