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Like many industries, with the widespread spread of the new crown virus, the world's bearing industry has suffered a major blow. Although experts generally believed that the global bearing industry must achieve growth in the next few years, following the footsteps of the entire society, the development of the global bearing industry came to a halt after the outbreak.
According to a report from Fortune Business Insight, the global bearing market was valued at 39.46 billion U.S. dollars in 2018, and the future prospects are bright. Just before the new crown brought the world to a standstill, the bearing market was expected to grow by an average of 3.6% per year, bringing the market to 52.44 billion US dollars in 2026.
However, in the shadow of the possible coming of a global economic recession, other industries such as aerospace, automotive, mining, construction and manufacturing will bring various obstacles to the recovery of the bearing industry. One thing is certain, this recovery of the global bearing industry will not be easy.
But at the same time, we should also note that Oxford Economic Research shows that with the recovery of the world after the 2008 global financial crisis, the trend of steady growth in global GDP should continue in the long run.
Looking to the future, we believe that on the one hand, if the new crown really triggers a serious economic recession (and thus another financial crisis), the global GDP may not reach the level before the spread of the virus until the end of 2023. On the other hand, if science and technology make sufficient progress in our understanding and control of the virus, so that the world will return to normal soon (and there will be no second wave of epidemics), global GDP is likely to return in the second quarter of 2021. On track.
A white paper released by the World Economic Forum pointed out that although similar disasters have occurred in the world in the past, none of them have had a greater impact than the new crown virus, partly because the virus is affecting all economies.
The report also pointed out that “previous crises are usually concentrated in one industry or one region, but the new crown virus is a global crisis that has affected more than 75% of global manufacturing output”. This will undoubtedly have a cascading effect on the bearing market.
According to data from Fortune Business Insights, global commercial aircraft revenue in 2018 was approximately US$191.1 billion, and is expected to grow by approximately 2.93% annually. This will lead to good growth in the civil aircraft manufacturing industry, as well as
increased demand for power transmission and bearing products.
However, aviation giants Boeing and Airbus are facing considerable resistance and difficulties, because large-scale quarantine measures around the world have stalled the flow of people in most parts of the world. According to statistics, the number of daily international flights in the second quarter of 2020 has decreased by 87%.
After recently laying off 15,000 employees, Airbus CEO Guillaume Faury said his company "is facing the most severe crisis in the history of this industry."
Therefore, according to the Oxford Economics Research Institute, from the fourth quarter of 2019 to the second quarter of 2020, manufacturing output in the aerospace industry fell by 25%. At the same time, the production of the automobile manufacturing industry, which the bearing industry also relies heavily on, also dropped by 37%.
In addition, the output of some other industries that provide a large demand and source of income for the bearing industry has also lagged behind their previous plans and expectations.
This includes the electrical equipment industry, according to Oxford Economic Consulting, the industry's output fell by 13%. On the other hand, the output of the industrial machinery industry also fell by 12%. According to Ariston's research, the global precision parts market is expected to grow by 10% during the period 2021-2025.
In addition, there is also the metal and metal products industry, whose output has also fallen by 8%. However, we also see that “the global demand from January to May of 2020 is 9.86 million tons, which is higher than the 9.61 million tons in the same period in 2019. According to the report of the World Bureau of Metal Statistics, China’s demand from January to May of 2020 is 532 10,000 tons, 9.8% higher than the first five months of the same period in 2019.
Since the decline in global demand is actually not only caused by the widespread spread of the new crown, this lack of demand may continue for some time even if the impact of the new crown ends in the future. In addition, regional conflicts and the increase in hostilities among other participating countries, as well as global financial market turmoil, coupled with political and regulatory obstacles, such as increased taxes and tariffs, may cause demand to continue to decline in the future.
We should see that although the operating income of some sub-industries has fallen by more than 40% to 50%, the overall data of the bearing manufacturing and distribution market has only dropped by 20% to 20% during the global quarantine due to the epidemic and various social activity restrictions. 25%.
The better news is that relevant data show that demand in the bearing industry has almost returned to the level before the lockdown, especially in the distributor market.
Although the new crown virus has severely disrupted the industry and the market, new business opportunities are emerging after its widespread spread. A good sign is that new and various small bearing and power transmission companies are being established, which is a clear manifestation of confidence in the rapid recovery and future potential of the bearing industry.
Compared with the obvious reaction of the distributor market, the measures and regulations related to the epidemic and economic revitalization that local governments have and will take will have a greater impact on the recovery and development of the bearing manufacturing industry. Since this point is currently uncertain, we are still unable to determine whether the growth of bearing manufacturers in the future is reliable.
To see the direction of the bearing industry, we must not only consider the overall situation of the entire bearing industry, but also the unique situation of a specific industry, including the current chaos and future prospects. For example, the continuing turmoil and change in the automobile manufacturing industry (which started before the spread of the new crown) is likely to have a significant impact on certain specific bearing types. As more and more countries introduce carbon-free emissions policies to deal with people's growing concern about climate change, companies are paying more attention to the manufacture of electric vehicles. Because electric vehicles require fewer anti-friction parts, this will lead to a reduction in the demand for machine tool parts that need to be processed for these anti-friction parts.
In contrast to the automotive industry, there are other industries around the world, such as food processing, agriculture, maintenance, medical equipment, electrical equipment, and robots, whose demand is expected to grow substantially, thereby contributing to maintaining the development of the bearing industry.
Although the current expectations for the growth prospects of the world bearing market are not as high as before the virus spread, the first signs of recovery of the world economy and industry have marked the beginning of a new era, so we expect the situation of the bearing industry to change rapidly. In the future, manufacturers will need to focus on developing more customized bearings and low-volume, high-profit products based on the ever-changing market structure and consumer demand trends.
For a period of time after the end of the virus, due to the need to continue to develop their own infrastructure, China, Indonesia, Vietnam, India, Thailand and other parts of the Asia-Pacific region will continue to increase demand for construction, energy and industrial equipment, so that the world economy will grow carry on. For example, the rapid development in the field of renewable energy will drive more and more demand for roller bearings. Compared with 2019, the demand for parts and components in the energy industry in the Asia-Pacific region increased slightly during the spread of the virus, while water transportation and other marine and aquatic industries remained basically unchanged.
Because a more mature industry foundation has been built, North America and Europe will continue to contribute to the further development and growth of the world economy and the bearing industry. Driven by digitalization, these regions will increase investment in customized solutions and related products and industries for high-tech and equipment. Our main expectation for European and North American companies is that they will shift from an efficiency-focused system before the spread of the new crown to a resilient resilience-centered system. The greatest result of the shift to a resilient resilience-centric system will be to restore and further optimize the supply chain, and to adopt more cautious strategies on how to globalize in the future, and pay more attention to risk prevention, control and response.
