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Hanover Fair 1947-2007 in Review
By Arthur Visser, Bishop & Associates Inc.
This 60th
edition of the Hanover Fair was held from April 16-20, 2007. With over
230,000 visitors—an increase of over 10 percent from last year—the
“Hannover Messe” reconfirmed its position as a leading technology event
for the industry. Thirty percent of the visitors came from countries
outside of Germany, and the biggest growth in visitor numbers came from
the Americas and Eastern Europe. Forty-two percent of the visitors
indicated that their main motivation to visit the show was to catch-up
with the latest developments. In addition, the Hanover Fair is an
excellent place for networking, exhibiting innovations, and initiating
new client projects, and it has been continually growing and developing
since its 1947 inception as the “Export Trade Fair.”
Traditionally, we find a select group of connector manufacturers
exhibiting at the Hanover Fair. Those connector manufacturers that
specifically service the industrial market and sell products for
applications in harsh environments consider the Hanover Fair an
excellent event to showcase their products to the industry.
Among the
connector manufacturers exhibiting this year were the following
companies:
For
HARTING, it was a special occasion, as it was the 60th time
the company has participated in the Hanover Fair!
HARTING first came to
the Fair on August 18, 1947 (see photo below).
As could be
expected, most connector manufacturers expressed their satisfaction with
the results obtained in 2006. Without exception, the mood was upbeat and
positive. 2007 has started off strong for the industrial connector
market.
For most,
if not all, connector manufacturers, 2006 was an exceptionally good year
with double-digit growth in all market segments and even for most
product types. Growth rates last year varied per manufacturer and per
market niche, from 5-10 percent, up to 40 percent.
Additional news from BELDEN and Lumberg…
Earlier this year, BELDEN acquired HIRSCHMANN Automation and Control,
and now it has added LUMBERG to its list of acquisitions, as of last
month. This acquisition was done with the intention to complement the
industrial connectivity portfolio of HIRSCHMANN Automation and Control
and reinforce BELDEN's position in the industrial market.
Connector Industry Performance and Outlook
Reports from most connector manufacturers we spoke to at the Hanover
Fair continued to register good sales growth during the first three
months of 2007. The German economy picked up steam last year and the
outlook remains good. The industrial output in Germany represents
approximately one-quarter of the total industrial output in the European
Union, and is therefore a determining factor for overall performance in
the European market. Even when industrial activity in some other
countries, like France, stays behind, the performance of the connector
industry in Europe is currently very good and does not yet show signs of
softening or decline. The Italian economy also did unexpectedly well
during the fourth quarter of 2006.
Real and Forecasted GDP Growth Rates (2006-2008) %
Current
forecasts indicate that Germany will outperform its main partners in the
European Union in 2007 (see graph). This does not mean the connector
industry will be able to repeat the results of 2006 for the full year of
2007. Earlier this year, Bishop & Associates forecasted an overall
European connector market growth of approximately 2.7 percent for 2007,
excluding any speculation or prediction on the exchange rate U.S.
dollar/euro. Given the current results in the industry, it looks like
this forecast definitively has an upward potential for Europe. The
Euro-zone GDP growth has already been adjusted upward to 2.5 percent,
and for the total EU, to 2.7 percent.
There are
however, enough reasons to remain vigilant. Recently, the euro has
dramatically gained value against the U.S. dollar and the strong euro
will most likely start to affect industry results from the third and/or
fourth quarter of 2007 onwards.
U.S. Dollar vs. Euro 2006-2007
Other
factors that will influence the European/German market performance:
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Sustained high raw material prices
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Increased interest rates (European Central Bank)
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Weakened U.S. economy
-
Pay raises in industry (demands triggered by good
performance)
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Increased value-added tax rate to 19 percent (from 16
percent) in Germany
The overall
consensus at the Fair was that the European connector market remains
promising, the Asian markets, especially China, continue to grow
strongly and the North American market is showing signs of weakness.
When
zooming in to specific markets or niches, these generalizations on the
outlook may be different; this means that connector manufacturers will
have to differentiate their forecasts for the various regions and
markets.
New Markets
Even as the European industrial connector market continues to show good
growth, other markets show less confidence. The computer and peripherals
market segment for electronic connectors is expected to decline further
in Europe. The automotive industry in Europe remains under pressure.
While in Central and Eastern European countries, a significant build up
has been, and still is, taking place in automotive production
facilities, mainly in the Czech Republic and the Slovak Republic. The
output of passenger cars in (Western) Europe has been stagnate, or even
slightly decreasing, in the past three years. Markets for
“new” energy sources, like wind energy and solar energy, are currently
booming.
Although
the German market for wind turbines is still strong, the industry
expects a decline in the near future from the high cost of raw materials
combined with a softening of domestic demand. In the United States,
however, where the connector market growth in general is said to be
slowing down, the market for ”green” energy sources, like wind and solar
energy, is booming and is going though a period of extreme growth.
New Products
In 2005 and 2006, Bishop & Associates dedicated various articles in
ConnectorSupplier.com to Industrial Ethernet. Today, Industrial
Ethernet is the network of choice in many industrial applications and
many new connector products have “seen the light” in the past year
because of this. Most industrial connector manufacturers have expanded
their product portfolio with Ethernet switches and I/O connection boxes,
either with or without embedded intelligence (management), and thus
moving into what used to be the exclusive domain of the manufacturers of
industrial automation equipment.
Turkey: Partner Country 2007
Like every year during the Hanover Fair, one particular country is
selected as a partner country and is put in the spotlight. Last year
India was in the spotlight, this year it was Turkey’s turn.
Bishop &
Associates released the research report “Emerging
Connector Markets in Central and Eastern Europe” last year
(September 2006), covering, among others, the Turkish connector market.
The Turkish connector market was the second largest connector market in
2005 in the CEE region, just behind Hungary.
2005 CEE Connector Market - Top Five Countries
The Turkish
connector market was estimated at US$176.2 million in 2005, with a
compound average growth rate of 9.9 percent until 2010. Given the
exceptional growth rate of the (worldwide) connector market last year,
we estimate the Turkish market to have reached US$200 million in 2006.
2005 Turkish Connector Market
End Use Equipment
Turkey is a
leading producer of TVs in Europe, and the automotive industry has also
been further developed, especially in the northwestern area around
Istanbul. Telecommunication and industrial applications follow in third
and fourth position for connectors. Turkey is also a relatively
important producer of military equipment.
Although
discussions between the European Union and Turkey regarding Turkish
membership in the UNION are progressing, they are anything but smooth.
Turkey is still en route to become an important economic stronghold,
bordering the southeastern part of Europe. The Turkish economy grew by
6.1 percent in 2006. Its growth is forecasted to slow to 5.0 percent in
2007, and remain at a 5.5 percent level throughout 2008.
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