The Global Marketplace for Turbines

By Hester, Edward D.; Gross, Andrew C. | Business Economics, July 2004 | Go to article overview

The Global Marketplace for Turbines


Hester, Edward D., Gross, Andrew C., Business Economics


The world market for turbines and related products (turbine-based engines, generators and generator sets) is projected to increase at seven percent per year in current dollars through 2007 and reach the $77 billion mark that year. Such growth will not match the surging gains of the 1998-2001 period, but conditions are expected to improve due to greater demand for electric energy and a rebound in air traffic. Electric power plants and aircraft account for over 90 percent of shipments. Turbine suppliers will find opportunities in several countries with above-average growth potential, including China, India, and other Asian nations. The turbine manufacturing industry is highly concentrated, with five firms dominating the global electricity generation aircraft engine market.

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Turbomachines are large industrial energy equipment devices. They feature fluid flow (air, steam, water, gas) through rotating blades. If the energy is extracted from the fluid, by expanding the fluid to a lower pressure, the devices are called turbines. If the energy is transferred to the fluid, thereby increasing its pressure, the devices are called pumps, fans, or compressors. In this article we deal only with the former, turbines and related machinery. The idea for turbines dates back to ancient and medieval times, but working hardware--specifically, steam and gas turbines--came to the fore much later, in the mid-nineteenth century. Since then, the field has seen many technological and economic improvements as well as complex changes in design and applications. A typical gas turbine has over 4,000 parts; a third of these feature exotic materials. Building such a complex device is an immense undertaking requiring high skills. Maintaining such a unit is also costly, along with rebuilding. Large turbines typically cost hundreds of thousands or millions of dollars. A turbine system ("turbine generator set")--which includes the turbine and generator, their acoustic enclosure, control systems, and other components--may run in the millions.

In this article, as in the 400-page monograph on which it is based, we distinguish six categories of turbine products: gas combustion, steam and hydraulic, wind, micro turbines, turbine engines, and turbine generators and generator sets. In terms of applications or markets, we delineate electric power generation, aircraft propulsion, marine, and other end uses. The first two of these account for over 90 percent of the total market. The global market is distinguished on the basis of major geographic regions (continents), with a special breakout on China. We open the article by discussing the economic/market environment, including global trade and investment patterns; we close with the presentation of industry structure. Three tables are included: the world market, 1997-2007, by geographic region, type of turbines and end uses; the situation in China during the same time period; and, the market share of major producers as of 2002.

Economic and Market Environment

While the end of the twentieth century was characterized by major advances in fields such as electronics, computing, and telecommunications, previous decades have seen significant progress in energy generation and transportation. Turbines have played a large role in these two sectors, specifically in electric power production and in aircraft propulsion. Still, the demand for turbines and related products is highly cyclical and quite volatile. The two principal markets are inherently sensitive to macroeconomic conditions and to the high cost of such devices. In developing countries, a few turbine-based units or systems can account for much of the budget of the purchasing organization, such as a power utility or a small, domestic airline. There is a robust replacement market or aftermarket, involving turbine repairs or rebuilding (not included in our discussion). The aftermarket effectively decreases the demand for new turbines from the original equipment manufacturers. …

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