Rest-of-the-world (RoW) markets will be the engine room of sales’ growth for equipment manufacturers, with rising living standards in those countries fuelling demand for automated cleaning processes. Nilfisk-Advance’s recently released (early March) 2010 annual report also notes that the equipment supply side remains largely fragmented.
‘The global market for professional cleaning equipment is estimated at about AUD$8.2 billion (45 billion DKK) annually, of which mature markets such as Western Europe and North America represent around 80%. The remainder is accounted for by the rest of the world (RoW), including the BRIC-MT countries (Brazil, Russia, India, China, Mexico and Turkey), which are expected to show the highest growth rates in the years ahead,’ notes the Nilfisk report.
‘Total market growth over an economic cycle is predicted to be around 3 to 4%, including up to 1 to 3% points represented by the mature US and European markets. RoW performance in the years ahead is expected to significantly exceed the global economic growth rate. Over a normal economic cycle, market growth of 4 to 6% is expected in good times and 0 to 2% in periods of slowdown.’
Nilfisk points out that there has traditionally been very little consolidation among the manufacturers of professional cleaning equipment. The five largest suppliers – Nilfisk-Advance, Kärcher, (Germany), Hako (Germany), IPC (Italy) and Tennant (US) – have a combined market share of a little less than 40%.
The rest of the market is split between some 100 suppliers that are primarily regional players.
The drivers
Nilfisk explains that, ‘The demand for automated cleaning is closely related to living standards and wage costs. Higher standards of living drive a need for increased cleanliness and higher pay, which in turn drives a need for automation. Western Europe and North America have hitherto been the largest markets, representing around 80% of the global total.
‘In years ahead the largest growth rates are expected to be in the rest of the world, specifically the BRIC-MT markets (Brazil, Russia, India, China, Mexico and Turkey).
‘A fundamentally close link therefore exists between world economic growth and sales of cleaning equipment. Cleaning equipment is seldom a vital purchase item for the end-user. The cleaning industry is therefore particularly hard hit in the case of global economic slowdown, as was the case in 2008-2009 when sales of cleaning equipment fell by up to 20% in mature markets like Europe and the US and by 5 to 10% in the BRIC-MT
countries.’