Stationary Power - a Half Billion $$$ Industry for the Lead-acid Battery Market
by Shirley Georgi
The good news about the stationary battery market was most welcomed at the BCI (Battery Council International) Conference in May 2004 after hearing about the doom and gloom of lead prices. Mr. Robert Cullen of Hollingsworth and Vose Company reported that the 2003 North American industrial battery sales had reached a total of $493 million. This was 7.3% higher than the forecast given in the 2002 report where stationary battery sales were only predicted to rise by 2.5 percent. And the trend line for the ensuing years was up, not by a steep escalation but, by a gentle and positive incline so that by 2008, sales could be in the $800 million range. Stationary power rose 9.8 percent ($44 million). Approximately 55 percent of the sales were in telecommunications.
Is the telecom recessions over?
“Yes!” reported Mr. Cullen, but he added a word of caution - “that means the market is returning to ‘normal’ conditions. This is no way is a return to euphoric levels of 2,000. But,” Mr. Cullen continued, “it (the telecommunications market) is starting to rebound - slowly.”
In the U.S., the telecom market was down 19 percent in 2001 and 33 percent in 2002. The recovery did not begin until 2003. Although the number of units sold had increased, revenues and prices were depressed due to price wars. The long-term outlook looks good, but perhaps is better described as cautiously optimistic. However, “slow and steady” has won the race before, as is exemplified in the classic fable of the tortoise and the hare. Slow, steady growth rates of 3 to 6 percent are expected.
Telecommunications is a big category for Lead-acid. In 2003, this sector accounted for 55 percent of the sales in the North American market. It is a market which continues to grow and here are some of the components which are its drivers:
n Wireless, alone, is a $123 billion market and growing at a 9 percent rate in the U.S.
n The Wireless Internet which includes “Hot Spots” such as WiMax is forecasted to have 64 million users by 2006. Broadband, i.e. cable, is moving into the market.
n VoiIP (Voice-over Internet protocol) is expected to have revenues in 2004 of US$3.5 billion, but this number should climb to $15.9 billion by 2009.
So, in summing up the Telecom market, wireless/Internet are bright spots. Growth in 2003 was 6 percent. And barring any catastrophic event, by 2006, there will be a return to the bountiful levels of 2000.
What are the bright spots for the UPS market?
In 2003, sales to the UPS (Uninterruptible Power Sources) market were $135 million in the U.S. and $149 million in North America (N.A.). UPS sales accounted for 30 percent of the stationary power market in N.A. in 2003. By 2008, sales in the North American market are projected to be closer to, yet under, the $200 million mark. This is somewhat disappointing since sales for UPS were $200 million in 1998, ten years earlier.
However, the trend line in the next five years is up the and growth for the UPS sector is projected at 4.5 percent. There are possibly two reasons why growth will not be at a faster pace.
1) U.S. industry has a insatiable need for instant data. Data storage centers must maintain and preserve information by backing up their data and information base with UPS devices and batteries. Events of September 11th show how important it is to move away from complete centralization of data to multiple back up locations. Unfortunately, although there has been much conversation about implementation, there has been a reduction in capital expenditures and thus implementation in making the transition has been slow.
2) Although North America and European companies will be supplying the more advanced and complex batteries, Asian countries will continue to produce the bulk, or perhaps most, of less technically complex batteries and provide them globally at a lower price points than North American and European manufacturers could offer. Mr. Cullen stated, “All small and many mid-sized batteries are being manufactured in Asia.”
Keeping the market in a positive perspective
There is always a choice to look at the glass half empty or half full. But there is always more energy for going forth if the positive is viewed, so with that frame of mind, each success can be celebrated. The UPS battery segment has grown each year since 2000. Having only 22 percent of the stationary power market in 2000, the sector has gained a few percentage points each year, and in 2003, it held a 30 percent market share of stationary batteries. By 2008, UPS - related battery sales are forecasted to be US$185,000, not by maintaining status quo but, by continually enhancing Lead-acid design improvements to provide top quality products.
Acknowledgments: The information in this article is from the “Industrial Battery Forecast Report” by Bob Cullen (Vice President, Sales & Marketing Battery Separator Products Group -Hollingsworth & Vose Company ) at the Battery International Convention (BCI) on May 4th, 2004.
Data for the report was collected from BCI members who are Lead-acid battery manufacturers. Additional information and data were collected from industry contacts from companies such as Ericsson, Verizon Wireless, APC, Cisco, Nortel, AT&T Wireless, MGE and Tyco.
Hollingsworth and Vose Company is a nonwovens and fibrous materials manufacturer which supplies the Lead-acid industry with separators. Their newest patented separator, having greater resistance to puncture and shorts, is the Energy Guard battery separator for VRLA (Valve Regulated Lead-Acid) batteries. BD