Bearings are crucial components of almost every moving machinery, ranging from a machine as simple as a cycle or a skateboard, to heavy machinery used in mining, to something as complex as a weather satellite. Bearings reduce friction and efficiently distribute operational stress on the moving parts of a machine.
As of the second quarter of 2019, the bearings market is estimated to be worth $94 billion; and is expected to be worth nearly $113 billion by 2022. As indicated by an extensive bearings market research, the bearings market is currently growing at a CAGR of 4.7 percent.
Investment Opportunities in the Bearings Market
A new entrant may set up their manufacturing facility or invest in an existing manufacturer’s plans. While it is advisable to invest with a current player, new bearing manufacturers as well will not experience any shortage of growth opportunities.
The steady growth projections for the bearings market indicated sufficient investment opportunities. However, before investing, it is essential to analyze the market in-depth
Global Market Outlook
The global bearing market is expected to grow at a CAGR of 4.7 percent until 2022. Due to bearings’ extensive application in the production and engineering industries, the demand for bearings is highly dependent on the industrial activities of consumer economies.
- Currently, the global automotive industry is the largest revenue-generating consumer of the bearings industry. In the Asia-Pacific region, especially in China, India, and Malaysia, the automotive industry will continue growing rapidly due to a consistent rise in the demand for two-wheelers and cars; consequently increasing the demand for bearing products.
- In recent years, many bearing distributors have begun targeting new markets like the food and beverage industry, energy sector, automation industry, and manufacturing. Such diversification will tap into a potential market with lucrative business opportunities.
- The increase in investment in mining endeavors, demand for electric vehicles, projects for alternative and clean energy initiatives (such as wind-mills), and environment-friendly batteries has led to a compound increase in demand of heavy machinery. Hence, there has been a remarkable boost in demand for bearing products.
The U.S., Germany, and Japan are the top three manufacturers of bearings. China is gradually becoming an influential player in the market.
- The overall supply landscape of the bearings market is somewhat consolidated as the top six suppliers (based out of the U.S., Japan, and Germany) control approximately 65 percent of the total market share.
- The largest bearing manufacturers are Schaeffler Group (Germany), SKF AB (Sweden), JTEKT Corp. (a subsidiary of the Toyota Group, Japan), NTN Corp. (Japan), and NSK Ltd. (Japan).
Utilizing approximately 50 percent of the global bearing products, Asia is the top market for the global bearings industry. Within Asia, India and China drive the demand for bearing and lead the wind energy sector in the context of buying bearings.
- The Original Equipment Manufacturing (OEM) industries hold a 40 percent share in global demand, while after-market industries and industrial distribution market hold a share of 9 percent and 21 percent respectively.
- The demand for bearings in automobile sectors has slumped by a small margin recently, owing to shorter resale and longer lifespan of bearing products.
Challenges in the Bearings Market
- Counterfeit Products: In the recent past, the percentage of counterfeit bearings products flooding the market has increased manifold, mainly due to the Chinese manufacturers who use poor grade raw materials and make cheaper products. While these products do not have a lifespan as good as the original bearings, a significant section of consumers is attracted to the cheaper products to keep their operational costs low in the short-term.
- Mounting Pressure to Innovate: Since there has been no radical technological revolution in the bearings production industry in the last few years, manufacturers are now experimenting with ball bearings by combining various technologies of today with the basic bearing products. Further, aggressive pricing and cost structure optimization have led the vendors into a race to produce the lightest, quietest, smartest, and most durable bearing variants.
- The influx of New Players: Due to the promising outlook of the bearings market, there has been a steady influx of new players in the bearings market. Further, the market witnessed a significant drop in bearing prices in 2016 due to oversupply. While the rates have since improved, the profits are yet to get back to their initial stature.
Prevalent Market Practices
Approximately 40 percent of the bearing products are sold directly by the manufacturers, while industry distributors sell around 21 percent of the ball bearing products.
- The U.S., the U.K., Germany, Italy, France, China, Canada, and Japan are the saturated markets, whereas the MEA, India, and Australia are emerging markets.
- The demand for bearings fluctuates in correlation with the intensity of industrial activities across the buying sections. This relationship may be attributed to the fact that the production and engineering industries are the primary buyers of bearings.
- The latest Occupational Safety and Health Administration (OSHA) guidelines have put the acceptable noise limits in warehouses, factories, and other commercial spaces at 80 decibels. Consequently, many bearing vendors like NSK Ltd, SFK AB have launched bearing models which produce 10-15 percent less noise as compared to other alternatives.
Across all conventional consumer sections, bearings market is experiencing a surge in demand (with the unique exception of the automobile sector). As the demand grows in the near future, bearing manufacturers will be required to expand their capabilities and scale-up.