Winds of change

During the same period of the three storms, winds of change blew through the industrial laser community

Who would believe three powerful hurricanes would hit the United States in a period of about six weeks, wreaking havoc along the Florida peninsula and the Gulf Coast? The effects of these storms were felt across the Eastern U.S., even as far north as the Delaware River Valley where this editor's plane was delayed into Philadelphia International Airport due to torrential rains from Hurricane Charley, which refused to move out of the area for two hours, forcing a refueling stop.

By now we all know the chaos that can occur when airline flights are thrown off schedule at major airports. And once the storm front passes, imagine the traffic jam, on and off the ground, as airlines try to recover lost planes and reroute them to get schedules back to normal.

Then picture the disruptions to business in the communities and the damage to homes in areas hit directly and indirectly by powerful winds and rain. It has not been a happy time in the eastern third of the United States. No wonder phrases such as "winds of change," "An ill wind blows no good," and "Blowing in the wind" convey negative thoughts.

During the same period of the three storms, winds of change blew through the industrial laser community, impacting a half dozen companies and likely changing the face and nature of the market. The Hurricane Ivan of the laser news was the purchase of PRC and Lee Laser by Rofin Sinar, following the Hurricane Frances news of the marketing cooperation between Prima Industries and Salvagnini and the Hurricane Charley purchase of W.A. Whitney by Megafab.

Mind you, on the surface this laser news was positive, seeming to offer a stronger combination of companies to better serve the market. But change has a way of causing ripples within the industry and many people affected by these changes have concerns.

ILS has long held the general opinion that consolidation in the industrial laser market is good and that such actions are a sign of a maturing market being served by strong companies which have product lines meeting the needs of all customers, especially when the mergers are friendly, corporate identities remain, and a minimal number of people are adversely affected.

The global industrial laser market is served today by several hundred suppliers of lasers and laser systems. In a survey we conducted two years ago, for example, we identified more than 200 companies claiming to offer laser marking/engraving equipment, and that number is probably on the low side.

Now the laser marking/engraving sector is a big business, using about 40% of all lasers manufactured. The marking portion is a relatively easy business to enter: buy a laser, galvos, and some software and you are ready to compete. One wouldn't expect consolidation in these two industries because of the low cost of entry and the massive size of the potential market for the application.

As application demands become more sophisticated and power demands increase, products evolve to meet customers' needs, and it is here that the consolidations are occurring. As we look forward to a $4 billion systems market in just a few years, we expect to see additional consolidations. Perhaps they won't be on a hurricane scale, but certainly, for those involved, they will provide some brisk winds of change.

David A. Belforte
belforte@pennwell.com

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