At a recent user conference put on by Bosch Rexroth in suburban Chicago, the company presented specifics on some of its latest components designed for use on mobile machinery. Specifically, we learned about products that, more than ever, incorporate hydraulics with electronics and software. This will lead to easier user experiences, additional flexibility in the equipment’s operation, and more efficient machines.
This is all wonderful news for OEM design engineers, for customers that will be using the equipment, and for the environment. But it also got me thinking about what this trend means for the fluid power industry itself. Let’s first take a step back in time.
Earlier in my career of covering fluid power, we experienced a period where the big three manufacturers at the time — Parker Hannifin, Eaton Corp., and Bosch Rexroth — were quite active in buying smaller companies. There were so many fluid power manufacturers that were created when soldiers came back from World War II and had, say, the idea for a hydraulic valve, and started a company. Certain ones grew larger than others, but as some of the companies reached a big enough size or came up with specific innovations, they were gobbled up by the larger players. As such, our industry saw a significant consolidation in the 1990s and 2000s.
This consolidation surely slowed in the last decade, but how long will that slowdown last?
These new, more sophisticated electrified components are going to be difficult to compete with for smaller manufacturers. A company like Bosch Rexroth has deep pockets and the ability to do extensive R&D — not to mention plan for a decade or more ahead. Many smaller companies don’t have that luxury and must keep a wary eye on the economy’s trajectory over the coming months or year.
So, what does this mean for fluid power? Are we entering into a new age of consolidation in this industry? What will happen to smaller manufacturers who can’t keep up with the rapid advances in component technology? Some may simply not make it. Others may find niche innovations that make them attractive targets to today’s “big three” of Bosch Rexroth, Parker Hannifin, and Danfoss. Could some even find themselves becoming essentially suppliers to one of the big three?
And don’t discount the idea that certain manufacturers could be purchased for their manufacturing capabilities — or even their engineering staffs. Given the talent crunch we’re seeing in fluid power and many other engineering specialties, that idea may not be so far-fetched in the near future. Regardless, what develops in the coming years will certainly be interesting to watch.
Filed Under: Fluid Power World Magazine Articles, News
