Revolutions in the fluid power industry

Fluid-hydraulic pumps power a broad range of production processes across multiple industries, from pharmaceuticals and chemicals to oil and gas. Compared to other systems, though, pumps are outsize energy consumers. But recent technological leaps—smart-pump technology, or “smart fluid hydraulics”—could increase energy efficiency, uptime, and productivity. While these technologies have high up-front costs, companies can recoup their investment over time through lower operating expenses.

Our recent report, Smart fluid hydraulics: Preparing for the imminent revolution in the fluid systems industry, provides an overview of the changing industrial-pump market and the opportunities ahead for smart fluid hydraulics and related equipment. A link to the full document appears at the end of this summary.

Recent McKinsey research shows that the global industrial-pump market is worth approximately $70 billion today. By 2025, the market is projected to be worth $85 billion to $90 billion. Original equipment accounts for approximately 70 percent of the global industrial-pump market, while aftermarket represents the remaining 30 percent. The design archetypes for original equipment include standard pumps, special-purpose pumps, and engineered pumps. Aftermarket breaks down into three main revenue sources: OEM parts, third-party parts, and service.

The smart fluid hydraulics–equipment industry includes five main segments:

Process industries such as steel, oil and gas, pulp and paper, pharmaceuticals, and food and beverage could benefit significantly from smart hydraulics. Industrial processes account for 42 percent of power consumption in the European Union, and pumps consume the highest share of energy at 30 percent (exhibit).

Some OEMs have already introduced smart fluid-hydraulics products and may have already gained a competitive advantage. Other companies that are developing new technologies can still capture great growth and sales potential, however. The following no-regrets moves can help them develop component and service offering strategies:

In addition to looking at strategies for companies in the fluid hydraulics–applications industry, we also examined end-customer needs, focusing on five industries: chemicals, pharmaceuticals, oil and gas, food and beverage, and pulp and paper. Here’s a look at some key findings:

Download the full report on which this text is based, Smart fluid hydraulics: Preparing for the imminent revolution in the fluid systems industry.

Harald Bauer is a senior partner in McKinsey’s Frankfurt office; Christian Bayer is a professor at Aalen University; Michael Becker is a partner in the Munich office, where Franz Ramsauer is an associate partner; and Markus Simon is a partner in the Cologne office.