The European Pump Market Post-Financial Crisis
Pump manufacturing is tied directly to the building services industry. Commercial and industrial building applications represent a major segment of the market; this is especially true for centrifugal pump manufacturers. The global economic recession of 2008-09 negatively affected growth across Europe in the building services industry, particularly countries like Spain, Italy, and Greece. Major application segments for pumps within commercial and industrial buildings include: heating, ventilation, air-conditioning (HVAC), pressure boosting, drainage and sewage, and fire protection.
As a direct result of the economic downturn, revenue generated from new pump installations across Europe decreased by $11.5 million from 2008 to 2009. Although 2010 saw steady growth in Germany, Scandinavia, and Eastern Europe, the sustained sovereign debt crisis in 2011-12 slowed building activity as customers budgeted more conservatively.
In Spain, housing prices decreased by 30 percent in 2009 and building licenses decreased by 60 percent. Similarly, Italy witnessed a sharp decline in investments in new building projects in 2011-12. The building services industry in Greece is currently in crisis with the introduction of stringent austerity measures, while a reduction in public sector spending is expected to further contribute to a decline in pump market growth.
The scheduling of the 2012 Olympics and the European Football Championship in the UK and Poland, respectively, boosted the building services industry; the games required upgraded transport terminals, apartment complexes, hotels, and stadiums. In general, however, Southern Europe has seen a decline in new building activity that has translated to reduced revenue generated from pump installations in new buildings compared to pre-recession years.
Due to decreased building activity, enforcement of EU environmental impact legislations is likely to be the catalyst for the recovery in Europe. The Ecodesign directive is one example of such legislation; it has a goal to reduce energy consumption in buildings by 20 percent by 2020, which may require mandatory replacement of existing pumps with energy-efficient alternatives. After the financial crisis, major pump manufacturers focused on the refurbishment market as a source of work. In 2011 and 2012, the replacement and spare parts market accounted for an estimated 50 percent of revenue generated from the pumps market for commercial and industrial buildings in Europe. In the future, energy efficiency will drive both markets.