The price of on-site field machining services is projected to grow at a slightly subdued rate in the three years to 2018, as diminishing return on investment begins to slow funding for industrial equipment.
Los Angeles, CA (PRWEB) March 10, 2015
On-site field machining services have a buyer power score of 3.3 out of 5, which suggests that buyers have moderate purchasing power. A high level of service specialization, coupled with a low availability of substitutes, hamper buyer negotiation power. At the same time, a negligible level of price volatility, intense price-based competition among small- and medium-size vendors, as well as moderate growth in service rates have offset this impact, favoring buyers. “Altogether, these diverse trends form a moderate degree of purchasing power,” says IBISWorld procurement analyst Agiimaa Kruchkin.
Buyers demand on-site field machining services in diverse downstream markets, including mining, oil drilling and automotive manufacturing. “As a consequence, these services are highly specialized because suppliers provide an array of services that maintain and repair various types of equipment and machinery,” adds Kruchkin. “Additionally, the only viable alternative to field machining involves setting up an in-house machine shop.” However, maintaining an in-house team requires a significant capital investment, meaning most buyers remain dependent on in-situ machining. Furthermore, although the pressing need for repairs sustains low buying lead times, it also reduces buyer leverage in price negotiations. Collectively, these conditions undermine buyer power.
On the other hand, low price volatility has supported buyer power. Field machining services are well-established and widely adopted, which warrant a steady level of downstream demand and, hence, mitigate price volatility. In addition, industrial production, oil and gas production and private investment in industrial equipment and machinery have rebounded, thus fueling demand and prices for in-situ machining services. Nevertheless, intense price-based competition among small and medium-size vendors has moderated the increase in service rates, thereby boosting buyer's degree of leverage. In the three years to 2018, service rates are projected to continue rising, albeit slowly. Buyers can enter multiyear contracts to lock in current rates for the duration of the agreement. For more information, visit IBISWorld’s On-Site Field Machining Services Procurement procurement category market research report page.
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IBISWorld Procurement Report Key Topics
This report is intended to assist buyers of on-site field machining services (also known as in-situ machining and portable machining). Suppliers in this market travel to buyers' facilities to provide planned and emergency repair, maintenance and modification services for equipment that cannot be easily shipped. Vendors service a variety of onshore and offshore machines and equipment, including generators, turbines, valves, mining equipment, drilling rigs, pipes and pipelines. Relevant services include drilling, flange facing, turning, weld testing, hole boring, line boring, polishing, foundation milling and pipe cutting.
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
About IBISWorld Inc.
IBISWorld is one of the world's leading publishers of business intelligence, specializing in Industry research and Procurement research. Since 1971, IBISWorld has provided thoroughly researched, accurate and current business information. With an extensive online portfolio, valued for its depth and scope, IBISWorld’s procurement research reports equip clients with the insight necessary to make better purchasing decisions, faster. Headquartered in Los Angeles, IBISWorld Procurement serves a range of business, professional service and government organizations through more than 10 locations worldwide. For more information, visit http://www.ibisworld.com or call 1-800-330-3772.