MARKETS

Products of the wire and cable industry such as technical springs, screws, fencing wire/mesh or power and data cables are different in terms of material, production procedure and appearance. But as they are necessary in order to transfer electric power, electronic data or mechanical energy, they are required in practically all sectors of industry. Major customers here include the automobile industry with its supplying and supporting sectors – as well as the transport sector as such – mechanical engineering, the energy sector and the area of information and communication technology.
Irrespective of their specialization, companies in the wire and cable industry predominantly face the same challenges, namely remaining market-compatible and competitive in view of the now worldwide competition and growing cost pressure. As far as the costs are concerned, the cable manufacturers’ association, "International Cablemakers Federation" (ICF), sees for example raw material prices as an extremely important factor in a cable manufacturer’s economic growth and performance and also points out the copper prices trend, followed by the price trend for those plastics required for installation and coating, sheathing purposes. This cost factor is in turn heavily influenced by the trend in oil prices. The wire and cable industry is thus fully integrated in the global development of the economy.
Hardly a day goes by when the trade and business press does not carry reports on India and China. For many years the People’s Republic of China with around 1.3 billion inhabitants and India with a population of approximately 1.1 billion have been a talking point with their remarkable growth rates. In February 2007 the ICF published a study in which the situation and economic outlook for the two countries were compared with each other. Both countries are the target of large investments from abroad and are experiencing a rapid expansion of their production and infrastructure. Hand in hand with this development the population’s purchasing power is also growing. A hitherto unprecedented consumer desire to purchase is in turn resulting in further economic growth. The wire and cable industry is benefiting from this trend directly and indirectly as its products are required in all sectors.

The Indian automobile industry and other markets for wire products

In view of annual economic growth rates in excess of 8%, a middle class with very high purchasing power is now forming in India. A highly informative indicator for the economic development is the automobile industry. In the meantime, the Indian automobile manufacturers have been joined by many manufacturers from all over the world aiming to secure a market share. For example at the end of 2006, automobile manufacturer VW decided to set up a factory in Pune in the federal state of Maharadscha, which is geared to annual production of more than 100,000 vehicles; in cooperation with the Indian manufacturer Mahindra, Nissan and Renault are seeking to set up a factory by 2009, at which within the first seven years of its opening, it is planned to step-up annual production to 400,000 vehicles.
As the ICF Study reveals, monthly automobile production in India increased from between 60,000 to 70,000 vehicles in mid 2003 to more than 100,000 in the course of the second half of 2006. According to calculations by the analysts at Standard & Poor's, in 2006 the Indian automobile market grew by 16% thus making it one of the world’s fastest growing sales markets. There is no end in sight to this trend.
The largest obstacles to the economic development and expansion of the country lie in the poor state of its 3.3 million-km long road network, including 65,000 km of motorway, and its power supply network. According to the ICF study, only 74% of towns and villages and only 44% of rural households are connected to the mains power supply system, which also operates with high losses. Therefore the modernization and extension of the infrastructure have priority for the Indian government. In the next three years the government is seeking to invest more than 60 billion US$ in the development and expansion of the road network. As far as power supplies are concerned, experts estimate that by 2030 investments amounting to 1,000 billion US$ in the energy infrastructure are required. Billion-dollar investments are also planned for the Indian railway infrastructure. Raimund Abele, Vice-President of the Association of the German Railway Industry (VDB), regards India as a market which will keep the sector very busy in the next 10 years. A report published in March 2007 in "Handelsblatt", the business and financial newspaper, on the situation in the rail industry, stated that in China and India above-average growth rates in excess of 4% were to be expected in the area of rail technology. It went on to say that the suppliers of components would have good market opportunities, as the rail network and system in India is 30 to 40 years behind that of the developed countries.
Of course other sectors of industry and not least companies, who are in some way involved with environmental protection, expect growing demand, which can be only satisfied directly or indirectly by products from the wire and cable industry.

The wire and cable industry and its supplying sectors

According to investigations by consultants CRU, which are based on the ICF study, Indian cable production reached 2.2 billion US$ in 2005 and thus a comparable level to that of France or Mexico. The Indian cable industry is made up of a few relatively large manufacturers and many small companies, who in some cases only have basic production equipment and facilities and are mainly operating as suppliers for the domestic market. A consolidation process has not yet taken place. The ICF expects that in India there will be a continuing high demand for cables, which is connected with the development of the infrastructure and the fact that high economic growth is not possible without continual investments. Suppliers to the Indian wire and cable industry include Maschinenfabrik Niehoff, an internationally operating manufacturer of machines for the wire and cable industry. In February 2007 the technology company and its Indian subsidiary opened a new factory in India. The newly constructed factory had become necessary because the rented production facilities up to that point were no longer sufficient to cope with the growing demand. In an interview with "Wire Journal International" trade magazine, May 2007 edition, Niehoff Executive Director, Heinz Rockenhäuser, points out that his company has already been active in India for more than 30 years. The subsidiary company, Niehoff of India (NoI), which was formed several years ago out of a licensed partnership with an Indian company, maintains contacts with all renowned Indian cable manufacturers, and under licence or for its own account, builds machines for the Indian market but also for neighbouring countries such as Pakistan, Bangladesh, Sri Lanka and several African countries. For the next few years Heinz Rockenhäuser expects NoI to increase its annual sales by 10%. In terms of the customers’ requirements, good growth potential is to be expected especially as far as cables for domestic installation (building wire), medium and high-voltage power cables and automotive wires are concerned.
Another sector in the wire industry is that of spring production. As the mechanical expenditure involved with spring production is relatively small, there are numerous manufacturers in India, mostly family-run companies. Egon Reich, General Sales Manager and Member of the Executive Board of the internationally operating Maschinenfabrik WAFIOS, which among others, manufactures machines for the production of technical springs, flexible parts and nails, sees attractive medium to long-term sales possibilities here. According to Egon Reich, the manufacture of such cable products is currently a predominantly manual process. The procurement and operation of semi-automatic or even fully automatic spring winding machines are currently financially out of reach for many Indian companies. But Maschinenfabrik WAFIOS, which assists and supports its Indian clients in service and sales/marketing matters via an agency, has already often been approached with requests for low-cost second-hand machines.
It is to be assumed that companies in the Indian wire and cable industry, which previously used traditional methods mainly to service the domestic market, will gradually modernize their production machines and facilities in order to participate in the world market. For many this change is expected to be tantamount to a gigantic technological leap.

wire 2008

The machines, plant and other production facilities, which the companies in the wire and cable industry will use to safeguard and further extend their competitiveness, will be presented at wire 2008, the leading international fair for the wire and cable industry. wire 2008 will be held in Düsseldorf from 31 March to 4 April 2008. For many visitors this is expected to generate synergies due to the fact that - as was also the case in the past - events such as the International Tube and Pipe Fair, Tube – and the International Fair for Manufacturing Technology and Automation, METAV, are held on parallel dates and next to each other at the same venue.

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