Demand for cathodic protection services has risen due to increasing industrial production and the mounting value of utilities construction, driving the price of this service upward
Los Angeles, CA (PRWEB) August 02, 2014
Cathodic protection services have a buyer power score of 2.6 out of 5, representing limited buying power. “This nature stems from the high level of customization required for buyers and the low availability of practical substitutes for them to choose from,” according to Business Research Analyst Ian Buchanan. Conversely, buyers gain back some negotiation leverage because of low market share concentration.
Cathodic protection services require suppliers to customize different solutions for each client. These services can be applied to storage tanks, both underground and above, oil and natural gas pipelines, utilities infrastructure, concrete structures, boats, oil rigs and any other object susceptible to damage from corrosion. As such, each buyer has a unique situation that the supplier must treat differently. Suppliers of cathodic protection services must design and install a cathodic protection system that will work specifically with the buyer's structure or equipment. Consequently, the high level of specialization reduces the number of suppliers available that can provide a high-quality service specific to the buyer's operations. A smaller pool of eligible suppliers means diminished buyer power.
Furthermore, there are a limited number of alternatives to cathodic protection services available to buyers. Depending on the regulations affecting buyers' specific operations, buyers may have little to no substitutes to cathodic protection services. Knowing that buyers have few alternatives, suppliers gain pricing leverage and buyer power is reduced further.
“Fortunately for buyers, the cathodic protection services market has low market share concentration, with demand fluctuations being the key influencer of prices,” says Buchanan. Because no singled vendor holds a significant share of total revenue, the market is highly competitive. This high level of competition increases the pressure on suppliers to offer flexible pricing and other incentives to avoid being undercut by competitors, helping support buyer power somewhat. Major vendors include Aegion Corporation, EMCOR Group Inc. and Brand Engergy and Infrastructure Services Inc. For more information, visit IBISWorld’s Cathodic Protection Services procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of cathodic protection services, including both passive protection and active protection methods. Passive protection is commonly achieved using a sacrificial anode system, which uses metals that are highly susceptible to corrosion to direct corrosion away from the structure being protected. Active protection is commonly obtained with an impressed current system, which applies a direct electrical current to the surface of an object to prevent corrosion. This report excludes corrosion inhibitors and anticorrosion pipe coatings.
Recent Price Trend
Product Life Cycle
Total Cost of Ownership
Supply Chain & Vendors
Supply Chain Dynamics
Supply Chain Risk
Market Share Concentration
Buying Lead Time
Key RFP Elements
Buyer Power Factors
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