Global Supply of Diesel Generator Sets

There are several key success factors for producers of diesel generator sets and one of the most important is the location of production facilities.  Two factors often decide this.

Location of Major Component Suppliers

Diesel generator sets contain a high percentage of bought-in components.  Engines, alternators / AC generators, cooling systems, control panels and other items can account for most of the manufacturing costs of a basic open unit.  The labor element in putting it all together is actually quite small, often a single digit percentage cost on a basic open unit at a lower power rating.   

This means that producers of diesel generator sets work closely with major component suppliers and locate production facilities nearby.  It's more efficient and keeps costs down.  

Near to Regional Opportunity

It's not surprising that producers are located where there is significant market opportunity.  

Proximity to both suppliers and customers means lower costs and shorter lead times.  And therefore North America, Europe, China and India are all major global production powerhouses.    

7.5 - 1500 kVA

At lower kVA bands, the world's largest regional markets are dominated by local producers, most of them sourcing major components locally.  

China and India, which account for around a quarter of the entire global opportunity from 7.5 - 1500 kVA, are supplied almost entirely by local production.   Most of this is local OEMs, but some of it is accounted for by global OEMs producing in-country:  in both China and India, around 10% of the market from 7.5 - 1500 kVA is accounted for by global OEMs.

In North America, where more than 80% of the market is served by local producers, almost all local production is by US-based OEMs.  

In Europe, around 60% of the market is served by regional producers.  Five years ago, this was closer to three quarters of the market and some of this change is attributable to higher imports from China.  We estimate around half of Chinese imports to the region are accounted for by global OEMs producing in China and exporting to Europe, the balancing figure being Chinese OEMs often using "western" branded components sourced in China.   

Over the last 10 - 15 years there's been a trend towards more regional production in Africa and Middle East.  Across all power bands from 7.5 - 1500 kVA, we place this at around 10 - 15% of the market, rising to around a quarter of the market at power bands from 7.5 - 250 kVA.  Many of these in-region producers are independently owned and working closely with major global engine and alternator OEMs.  In both regions, imports from both China and India have been growing.  

Imports from China to Africa and Middle East are attributed partly to global OEMs' producing in China.  But at lower ratings, there's evidence that Chinese OEMs are growing their market position, often on the back of Chinese investment.  We're also seeing growing imports from India.  At ratings closer to 1,000 kVA, we believe a majority of these are attributable to global OEMs producing in India.  But across the board and particularly at lower ratings, we're seeing a growing market presence from Indian OEMs.

The rest of the Asia Pacific market is dominated by imports from China with significant production still in Japan, but mainly for the domestic Japanese market.  

Above 1500 kVA

At ratings above 1500 kVA, again, the largest regional markets are dominated by local producers.  

In North America, close to 100% of the market is held by in-country producers, with an almost negligible number of imports.  

Around 80% of the market in Europe is held by European producers, most of them in the UK, France and Germany. These may be either independent producers or production facilities owned by major global OEMs.  Imports from the US and China (most Chinese imports are by global or European OEMs) account for around 10% apiece.  

In China, local production accounts for around 50% of the market and we estimate around two thirds of this is attributable to major US, European and Japanese  OEMs producing in-country.   These major OEMs also account for the bulk (85 - 90%) of Chinese exports to the rest of Asia at these higher power ratings.