The aftermarket is becoming increasingly important to original equipment manufacturers (OEMs) as sales of new equipment declines. In Asia’s mining sector, independent third-party providers already have a large market share of non-essential parts and are threatening to capture market share away from OEMs for strategic parts. A recent survey of 115 key decision-makers across mines in major Asian countries, including India, Indonesia and the Philippines, revealed that OEMs own a significant share of the strategic parts market, but could find themselves under increased threat by independent third-parties. The survey revealed that 66% of mines solely use OEMs and 21% use a mix of OEMs and third-parties for strategic parts. A similar dominance was seen for processing equipment parts. The non-strategic parts market, however, is far more penetrated by independent third-party suppliers who were solely used by 29% and used alongside OEMs by a further 25% of respondents. A key driver for the increased presence of third-parties is the relatively weak performance of OEMs when it comes to availability of replacement parts. Within the survey respondents were asked to rate their main OEM on 16 criteria, spanning a range of product and service attributes, and also the importance of the same criteria when choosing a supplier. Overall the availability of replacement parts was one of the three most important criteria, yet had one of the lowest levels of customer satisfaction. OEMs are most at threat among the smaller companies, since they have a greater market share when supplying parts for the largest companies involved in the survey, with a trend showing third-party supplier involvement decreases as company size increases for all types of parts. OEMs also have the edge when it comes to supplying parts to surface mines, with an increased involvement of third-parties in underground mining operations. The aftermarket is becoming an increasing focus for many OEMs in lieu of weaker sales of new equipment, and with 61% of respondents indicating an expected increase in spending towards equipment parts and components over the next 12 months, it has significant potential. However, OEMs will fail to maximise the potential revenue growth here unless they can tackle the relative dissatisfaction among Asian miners, with the risk of losing market share to independent third-parties. Nez Guevara, Senior Mining Analyst at Timetric’s Mining Intelligence Center, says: “The Asian mining industry on the whole has a preference for utilising OEM parts, particularly for strategic parts and for processing equipment requirements. However, there is a risk of losing market share to independent third-parties due to the disparity between the importance placed on the availability of replacement parts and the actual performance of the OEMs. With the industry continuing to focus on cost reduction, third-party parts providers able to deliver to requirements and at a lower cost pose a significant challenge to the OEMs.” *** Notes to editors About Timetric Timetric is a leading provider of online data, analysis and advisory services on key financial and industry sectors. It provides integrated information services covering risk assessments, forecasts, industry analysis, market intelligence, news and commentary. For more information and updates, please visit www.timetric.com and follow us on twitter. For further information If you are looking for more information on this or other Timetric reports, we are always more than happy to assist with data or Analyst insight. Please contact Aurelija Kolesnikovaite at the Timetric press office at press@timetric.com or call +44 (0) 2079 366 713. |