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Power Plants and Systems Industry
Overview
Insight's forecasts
divide the power plant segment into three categories:
- Large DC-to-DC power plants (5,000 to
10,000 amps);
- Small to mid-range DC-to-DC power
plants (200 to 5,000 amps); and
- AC-to-DC converters.
Power
plants and systems will represent an increasing proportion of the total
functional common core component sector revenue in the US (including
wire and cable, construction, and integrated electronic enclosure
packaging) through 2006. Power plants and systems revenue may only
represent a small portion of the overall functional common core
components industry revenues-5.4 percent of the industry's $25.3 billion
total revenue in 2001-but, due to its strong growth rate, it will
account for a larger percentage (6.5 percent) of the $33.4 billion
overall functional common core components industry by 2006.
The steady growth in power plant revenue
over the forecast period is attributable to the increasing attention
being given to power plants and systems by network operators. Providers
have deferred improvements of their power-related infrastructure in
favor of other projects for a very long time; however, Insight's
research suggests that Bell companies, despite the downturn, are now
concentrating on installing new power plants and systems, as well as
upgrading and maintaining older equipment. For a more in-depth look at
the other functional common core component segments, consult Insight's
reports entitled Telecom Construction and
Professional Services 2001-2006, Integrated
Electronic Enclosure Packaging: Frames, Cabinets, and Racks for Telecom
Equipment 2001-2006, and Wire and Cable:
Harnesses, Fiber, Copper Wire, and Coax 2001-2006.
Key Success Factors for Power Plant
Suppliers
The key trends that power plant and
systems firms need to address are:
- Addressing oversupply problems
- Meeting demands for new construction
and operator buildouts
- Following key industry standards for
products, paying attention to the requirements of the installed
base
- Addressing a key shift in the supply
chain infrastructure, whereby many large equipment vendors are
outsourcing their manufacturing operations o Improving available
technology in often-neglected areas
A gray market for power plants and
systems is becoming quite pervasive, as operators unload excessive
inventories below current list prices posted by vendors. Gray market
sales will have a direct effect on the original manufacturers'
inventories, which are already at record levels. Now and in the future,
successful companies will be those that are able to manage inventory
levels efficiently as demand changes.
The introduction of new operators and
services often requires the new construction of telecom buildings, the
refurbishment of non-CO facilities, and substantial re-configuration of
existing COs. Among a slew of other functional common core components,
these facilities are required to house power plants and systems. New
construction, while tempered by the slowdown, still exerts a positive
effect on demand in the power plant sector. The investments required for
constructing and maintaining the existing plant and infrastructure, as
well as superimposing new technologies, amount to billions every
year.
Successful vendors will pay close
attention to product standards and how to integrate new technologies
within the network. Standards have played a key role in increasing the
use and acceptance of telecom infrastructure products and core
components. Network operators often struggle to implement numerous new
infrastructure products with less-than-stable specifications and
standards. Vendors need to understand the true nature of the installed
base of equipment.
More and more, basic manufacturing is
being outsourced to third-party electronic manufacturing suppliers (EMSes).
The EMS firms (such as Flextronics International and Sanmina-SCI) have
formed strategic relationships directly with network operators and power
systems equipment suppliers to coordinate logistics, installations,
manufacturing, and e-commerce interactions. The suite of products and
services that EMSes offer includes:
- Manufacturing;
- Integration of enclosures;
- Power supplies;
- Wire and cable;
- Customer service; and
- Online customer help desks.
Previously, many of the products and
services that EMSes offer were provided solely by the functional common
core component suppliers.
In short, only by learning the lessons of
effective supply chain management will the operators and their suppliers
be able to navigate safely through the current rough waters that have
already swamped so many in the industry.
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