The State of the Onsite Power Generator Market By Ray Kacvinsky - PowerPoint PPT Presentation

The State of the Onsite Power Generator Market By Ray Kacvinsky Marathon Electric / Thomson Technology September 18, 2007 EGSA 2007 Fall Convention

Contents • Background on EGSA Statistics • Market History • Early Warning Projections • Other Industry Comments

PRELIMINARY REPORT (Includes estimated data) Quarterly Generator Shipment Survey Modified by Ray Kacvinsky For the Quarter Ended June 30, 2007 Generators Produced in North America Domestic Exports From North America to: Rating Speed North American Central & South Asia/ Middle (KW) (RPM) Shipments America Europe Australia Pacific Rim East PTO Generators - All Sizes All Other Generators 3.0 and 3000/3600 A D Under 1500/1800 D 3.1 to 3000/3600 A A D 5.0 1500/1800 D D D D D 5.1 to 3000/3600 A A A D 10.0 1500/1800 31,978 46 694 50 27 10.1 to 3000/3600 15.0 1500/1800 3,709 167 400 53 24 15.1 to 3000/3600 30.0 1500/1800 2,133 147 400 50 24 89 30.1 to 3000/3600 50.0 1500/1800 1,738 551 310 40 24 100 50.1 to 1500/1800 3,767 1,175 338 50 24 200 150.0 1000/1200 B 150.1 to 1500/1800 870 527 78 C 168 100 250.0 1000/1200 B 250.1 to 1500/1800 1,012 397 114 C 160 100 500.0 1000/1200 B B B 500.1 to 1500/1800 781 327 91 140 C 750.0 1000/1200 B B 750.1 to 1500/1800 279 64 90 C 120 C 1,000.0 1000/1200 212 B B 1,000.1 to 1500/1800 870 90 90 C 140 C 2,000.0 1000/1200 B B B B B B 2,000.1 1500/1800 397 9 20 C 48 C By kW range, by speed, geographic data, imports to 1000/1200 B C 4,000.0 750/900 C

PRELIMINARY REPORT (Includes estimated data) Quarterly Generator Shipment Survey For the Quarter Ended June 30, 2007 Generators Produced in North America Domestic Exports From North America to: Asia/ Middle Rating Speed North American Central & South (KW) (RPM) Shipments America Europe Australia Pacific Rim East All Other Generators (Continued) 4,000.1 1000/1200 to 750/900 C 6,000.0 600/720 6,000.1 750/900 to 600/720 8,000.0 500/600 8,000.1 750/900 to 600/720 10,000.0 500/600 10,000.1 600/720 and 500/600 Over <500/600 47,746 3,500 2,625 253 899 589 T otal Shipments - Q2 - 2007 105,650 5,239 4,488 538 1,583 1,017 T otal Shipments - YT D 2007 53,232 1,729 1,111 173 1,684 808 T otal Shipments - Q2 - 2006 101,031 3,959 2,441 464 2,934 1,168 T otal Shipments - YT D 2006 < - Less than By kW range, by speed, geographic data, imports

Observations - EGSA Statistics – Noise – Erratic Need to do – Clean up – Smooth out

EGSA Reported Shipments 500.1 kW – 750 kW 2000 1800 1600 1400 1200 1000 800 600 400 200 0 1 1 1 1 1 3 1 3 1 3 1 3 1 3 1 3 1 3 3 3 3 Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 4 5 6 7 8 9 0 1 2 3 7 0 0 0 9 9 9 0 0 0 0 0 0 0 0 9 9 9 0 0 0 0 0 2 2 2 1 1 1 2 2 2 2 2

EGSA Reported Generator Shipment History 50.1 kW - 150 kW (3 quarter moving average) 10000 Units 9000 8000 7000 6000 5000 4000 3000 2000 1000 0 d d d d d d d d d 8 9 0 1 2 3 4 5 6 7 r r r r r r r r r 9 9 0 0 0 0 0 0 0 0 3 3 3 3 3 3 3 3 3 t t t t t t t t t t s s s s s s s s s s 1 1 1 1 1 1 1 1 1 1 EGSA

EGSA Reported Generator Shipment History 500.1 kW - 750 kW (3 quarter moving average) 2000 Units 1800 1600 1400 1200 1000 800 600 400 200 0 1st 02 3rd 3rd 3rd 3rd 3rd 3rd 3rd 3rd 3rd 1st 98 1st 99 1st 00 1st 01 1st 03 1st 04 1st 05 1st 06 1st 07 EGSA

EGSA Reported Generator Shipment History 750.1 kW - 1000 kW (3 quarter moving average) 900 Units 800 700 600 500 400 300 200 100 0 3rd 3rd 3rd 3rd 1st 02 3rd 3rd 3rd 3rd 3rd 1st 98 1st 99 1st 00 1st 01 1st 03 1st 04 1st 05 1st 06 1st 07 EGSA

What do EGSA statistics say about the future? Let’s discuss one method of using them.

Rate of Change Rate of Change last 12 months Ratio = previous 12 months for Q3, 2004 Q3 2004 + Q2 2004 + Q1 2004 + Q4 2003 = Q3 2003 + Q2 2003 + Q1 2003 + Q4 2002

50.1-150 kW Rate of Change Curve by kW Range 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 d 0 d 1 d 2 d 3 d 4 d 5 d 6 d 7 r 0 r 0 r 0 r 0 r 0 r 0 r 0 r 0 3 3 3 3 3 3 3 3 t t t t t t t t s s s s s s s s 1 1 1 1 1 1 1 1

500.1-750 kW Rate of Change Curve by kW Range 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 3rd 3rd 3rd 3rd 3rd 3rd 3rd 3rd 1st 00 1st 01 1st 02 1st 03 1st 04 1st 05 1st 06 1st 07 1 999 2000 2001 2002 2003 2004 2005 2006

1000.1-2000 kW Rate of Change Curve by kW Range 2.50 2.00 1.50 1.00 0.50 0.00 d d d d d d d d 0 1 2 3 4 5 6 7 r r r r r r r r 0 0 0 0 0 0 0 0 3 3 3 3 3 3 3 3 t t t t t t t t s s s s s s s s 1 1 1 1 1 1 1 1 1999 2000 2001 2002 2003 2004 2005 2006

Cahners Early Warning System Rate of Change Curve A B 1.0 C D A = Market is increasing at an increasing rate. B = Market in increasing at a decreasing rate. C = Market is decreasing at a increasing rate. D = Market is decreasing at a decreasing rate.

Challenge of Forecasting 2007 • Wild swings in rate of change in previous 3-4 years. • All the curves are in the quadrant of increasing at a decreasing rate or increasing at a decreasing rate and are projected to have no sales growth sometime in the next 4 quarters. • In order to meet the projections, we have to be right on the turnaround of the rate of change. The timing of the turnaround and the point of the turnaround are the most difficult to predict. • Therefore this forecast is risky and will be more accurate when it can be updated when a turn occurs.

50.1-150 kW Rate of Change Curve by kW Range 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 d 0 d 1 d 2 d 3 d 4 d 5 d 6 d 7 d 8 d r 0 r 0 r 0 r 0 r 0 r 0 r 0 r 0 r 0 r 3 3 3 3 3 3 3 3 3 3 t t t t t t t t t s s s s s s s s s 1 1 1 1 1 1 1 1 1

500.1-750 kW Rate of Change Curve by kW Range 2.00 1.80 1.60 1.40 1.20 1.00 0.80 0.60 0.40 0.20 0.00 3rd 3rd 3rd 3rd 3rd 3rd 3rd 3rd 3rd 3rd 1st 00 1st 01 1st 02 1st 03 1st 04 1st 05 1st 06 1st 07 1st 08 1 999 2000 2001 2002 2003 2004 2005 2006

1000.1-2000 kW Rate of Change Curve by kW Range 2.50 2.00 1.50 1.00 0.50 0.00 d d d d d d d d d d 0 1 2 3 4 5 6 7 8 r r r r r r r r r r 0 0 0 0 0 0 0 0 0 3 3 3 3 3 3 3 3 3 3 t t t t t t t t t s s s s s s s s s 1 1 1 1 1 1 1 1 1 1999 2000 2001 2002 2003 2004 2005 2006

Generator - Market Summary (EGSA Statistics) kW 2004 2005 2006 2007 Est. (9/1) 10 – 15 -3% +40% -10% -30% 15 – 30 0% +40% -15% +10% 30 – 50 +51% +5% +16% -10% 50 – 150 +12% +35% 0% +2% 150 – 250 +22% +22% +25% +5% Small Generators +25% +22% +10% -5% 250 – 500 +30% +15% +25% 0% 500 – 750 +78% +15% +38% -5% 750 – 1000 +16% +15% +15% +10% 1000 – 2000 +96% +5% +30% +25% 2000 – 4000 +71% +20% +35% +20% Large Generators +30% +15% +25% +11%

Market Summary kW Projected 2008 10 – 15 -10% 15 – 30 0% 30 – 50 +5% 50 – 150 +5% 150 – 250 +8% Small Generators +1% 250 – 500 +5% 500 – 750 +2% 750 – 1000 +10% 1000 – 2000 +5% 2000 – 4000 +15% Large Generators +6%

Other Perspectives of the Power Generation Market from EGSA • Exports

Other Perspectives Exports 2007 1 st Half 2005 2006 Central & South America 5906 9065 5239 Europe 5661 7751 4488 Australia 1009 1138 538 Asia/Pacific Rim 4856 10384 1583 Middle East 1262 3280 1017 Total Exports 18694 31618 12865

In Conclusion • The Power-Gen market had seen a substantial contraction through 2003. • The market turned dramatically in 2004. • EGSA statistics show strong growth until second half of 2007 • Exogenous Factors • Iraqi Rebuild - ?? • Strong Dollar • Infrastructure Failure or Perception thereof • Hurricane post / pre-builds

Paid Political Announcement • Plan on attending the Marketing Trends Committee this afternoon • Those who are reporting need to make sure they do on a timely fashion • Mahola