With the expectation of slow unit growth and strong price pressure, the overall North American market for electric heating elements is only expected to increase at a 1.6 percent compound annual growth rate (CAGR) through 2005. This prediction was part of conclusions drawn in a study from Venture Development Corp. (VDC), Natick Mass., titled "The North American Market for Electric Heating Elements: Conduction Heating, Convection Heating, Radiant Heating." VDC based its predictions on its finding that the combined North American market for 23 types of electric heating elements exceeded $1 billion in 2002.

The overall North American markets for electric heating elements is mature, and growth rates on units for the period 2002 through 2005 are forecast in the study at between 0.7 percent (for tubular element conduction applications) and 7 percent (for flexible elements), with the median at only 2 percent.

Included in the study were the following types of electric heating elements:

  • Conduction: band, cartridge, cast-in, coil/cable, drum, flexible, strip and tubular.

  • Convection: circulation, duct, finned tubular, flanged immersion, open coil, over-the-side immersion, screwplug immersion and tubular.

  • Radiant: ceramic, ceramic fiber, etched foil, glass/quartz, glass-top range, tubular and metal sheathed panel.

The largest 2002 shipment level was of tubular elements, which accounted for about 29 percent of the total. Shipments of the five largest product categories (tubular, flexible, open coil, glass-top range and cartridge) combined accounted for 70 percent of total shipments.

A number of factors entered into the North American market forecasts for electric heating elements, including the generally poor state of economies in North America and of the various industry segments where electric heating elements are used. VDC expects moderate recovery over the next two years. More robust recovery is expected in some segments such as for the semiconductor industry.

Another factor considered for the forecast is that strong price competition is adversely affecting the dollar volume of shipments. Increasingly, lower-priced products manufactured in Mexico and China are entering the market. This in turn is providing motivation for U.S. and Canadian manufacturers to shift their manufacturing to these countries. This is further increasing the price pressure. Average prices on some of the products are expected to decline as much as 2 percent per year over the forecast period. None are expected to increase although the average prices for several are expected to hold steady.

Changing needs in the types of heating elements being purchased also was considered. Newer technologies like flexible heaters can provide improvements in solving heating problems vs. other methods. This leads to displacement of some other technologies, in addition to creating some new applications.

Another consideration for the forecast is the ongoing shifting of manufacturing and process operations that use electric heating elements to offshore locations with lower operating costs, particularly labor costs. This reduces the North American markets for electric heating elements, both for products being manufactured, and for use in facilities. Further, it increases pressure on manufacturers who have not relocated to reduce their costs. These firms in turn place more pressure on the heating element vendors to reduce their prices.

For further information about "The North American Market for Electric Heating Elements: Conduction Heating, Convection Heating, Radiant Heating," contact Marc Regberg at (508) 653-9000, ext. 111, or e-mail msr@vdc-corp.com.